Merkel Takes on Starbucks in Bashing Over Unfair Tax Practices

  • Chancellor says that Starbucks exploits tax loopholes
  • ‘That’s not right and we have to do something about it’

Chancellor Angela Merkel decried unfair tax advantages for multinational corporations, singling out U.S. coffee chain Starbucks Corp. as a tax rogue that exploits global arrangements at the expense of German chains.

At a meeting of Merkel’s Christian Democratic Union in her home district on the Baltic Sea coast, the chancellor sounded off against companies that engage in tax avoidance, hitting a theme that’s been taken up across the political spectrum. Many companies “have managed to pay taxes nowhere in the world,” Merkel said, before laying into the Seattle-based coffee chain.

Angela Merkel at the CDU meeting on Jan. 28.

Photographer: Stefan Sauer/picture-alliance/dpa/AP Images

“Coffee-house operators from Germany have to pay their taxes, while it’s not at all clear with Starbucks whether they pay taxes anywhere,” Merkel told CDU supporters in the northern German town of Grimmen on Saturday. “That’s not right and we have to do something about it.”

Starbucks has been in the cross-hairs of European Union regulators. The company is appealing a 2015 order by EU watchdogs to repay 30 million euros ($32 million) in taxes. EU Competition Commissioner Margrethe Vestager has prioritized the fight against special tax treatment for certain companies, arguing that it amounts to illegal state aid. A call and email to Starbucks in Germany were not immediately returned on Saturday.

Starbucks and a Fiat Chrysler Automobiles NV unit have been ordered to pay back taxes they allegedly avoided thanks to agreements with the Netherlands and Luxembourg.

Merkel and her finance minister, Wolfgang Schaeuble, have insisted on greater tax harmonization across the EU to stop tax avoidance schemes. As she seeks a fourth term as German leader this year, the chancellor has made clear she’ll use the issue on the campaign trail.

“Big international companies have managed to pay taxes nowhere in the world,” Merkel said in Grimmen. “That can’t be fair. I know about the anger here and it’s completely understandable.”

— With assistance by Weixin Zha

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