Green action leads to investigation of IKEA for €1bn tax dodge

An investigation by Greens into a series of tax loopholes used by IKEA paved the way for a European Commission investigation into the furniture giant, that was announced today. Molly says the 2016 report by Greens, and a letter to Competition Commissioner Margrethe Vestager, alerted the Commission to the tax dodging activities being used by Europe’s largest and most popular furniture manufacturer.  

The Commission will investigate whether two Dutch tax rulings may have allowed IKEA to pay less tax and given them an unfair advantage over other companies, in breach of EU State aid rules. Greens calculate that IKEA may have shifted at least €1 billion between 2009 and 2014, costing the UK a loss in tax revenue of around €11.6m in 2014 alone.

Commenting on the announcement of an investigation by the European Commission today, Molly Scott Cato, a member of the Economics committee in the European Parliament, said:

“Just like its flat-pack furniture, assembling a tax dodge is simple if you know the right tricks. But the announcement of an investigation by the Commission into IKEA’s could be the final nail in the company’s tax dodging activities.

“I am proud of the fact that Greens exposed these dodgy practices back in 2016 and the massive scale of lost tax revenue. IKEA provides a clear example of how a company can structure itself to shift profits away from where the economic activity takes place.

“This is a company which is held in some affection by British people but as Greens we believe all companies should be treated fairly when it comes to tax justice. Perhaps people will feel less warmth towards IKEA once they know that they have deprived the UK of tax revenue which could have gone towards funding schools and hospitals and other vital public services.

“This cynical ‘tax hopping’ is reprehensible and has to end. As well as the investigation by the Commission we need EU countries themselves to stop blocking action on tackling tax dodging and work immediately on trying to recoup tax revenues which have been denied to the citizens of Europe.”