Footwear giant Nike can’t stop an investigation into possible multibillion-dollar tax evasion, one of Europe’s highest courts ruled this week.
The General Court of the European Union on Wednesday rejected Nike’s arguments, which sought to end a high-stakes investigation by the European Commission into allegations that the company obtained an unfair advantage over its competitors when it signed agreements with the Dutch authorities in 2006 and 2010.
“The Tribunal does not accept any of the arguments put forward and rejects the appeal in its entirety,” the judges wrote.
The European Commission opened an investigation into Nike’s Dutch tax arrangements in 2019 following an investigation by the International Consortium of Investigative Journalists and more than 300 journalists.
The Paradise Papers investigation revealed how the shoe and clothing maker amassed billions of dollars in foreign revenue overseas. Much of the income was transferred out of Europe before it could be taxed, the ICIJ reported.
In its court submission, Nike alleged that the European Commission targeted the company “unfairly” due to political pressure following the ICIJ’s investigation into Paradise Papers. The Commission should also have opened investigations into 700 other companies with a similar tax structure, the company argued.
The court rejected Nike’s argument, ruling that there was no unequal treatment and that the US-based company had not identified other companies in the same situation.
Experts welcomed the decision.
“This is an important decision because the Commission’s state aid cases have played an important role in bringing tax injustice to the fore,” said Tove Maria Ryding, Policy and Advocacy Officer at the Network. European Commission on Debt and Development based in Brussels. “It also reflects how complicated the tax rules are that we continue to see all of these cases,” Ryding said.
In recent years, the European Commission has launched several battles against unfair tax deals. Its record is mixed: the commission lost litigation with Apple and Starbucks but was successful against carmaker Fiat.
Nike told the Financial Times he believed the ongoing investigation was “without merit.” He can appeal the decision.