EU Regulators Require That Starbucks, Fiat Pay Back Millions of Euros in Unpaid Taxes

The European Commission, the EU's executive arm, said Wednesday that tax deals granted to Starbucks in the Netherlands and Fiat in Luxembourg amounted to illegal state subsidies that must be repaid.

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The sums to be reclaimed are modest--amounting to between €20 million ($22.6 million) and €30 million for each company. And Wednesday's decisions are widely expected to be appealed at the EU's courts in Luxembourg, a process that can take years.

But experts said the probes have already created a chill in corporate board rooms across the continent. Hundreds, possibly thousands, of companies have used Luxembourg's holding-company rules to reduce their tax burden from the country's official 29% rate to almost nothing, according to documents disclosed last year by the Washington-based International Consortium of Investigative Journalists.