STARBUCKS and Fiat have been ordered to repay up to 30 million euro (£22 million) in illegal tax breaks after an EU ruling branded a "game changer" in the fight against tax avoidance.
An inquiry by the European Commission found that deals struck between the coffee chain in the Netherlands and carmaker in Luxembourg effectively amounted to illegal state subsidies that must be repaid.
The Netherlands and Luxembourg will now have to recover the unpaid taxes from Fiat and Starbucks, amounting to between 20 million euro (£15 million) and 30 million euro (£22 million) for each firm.
The landmark ruling is seen as a major step forward in the battle against tax avoidance deals used by global multinationals.
EU antitrust Commissioner Margrethe Vestager said: "Tax rulings that artificially reduce a company's tax burden are not in line with EU state aid rules. They are illegal."
She added: "All companies, big or small, multinational or not, should pay their fair share of tax."
The year-long investigation found that "most of the profits of Starbucks' coffee roasting company are shifted abroad, where they are also not taxed, and Fiat's financing company only paid taxes on underestimated profits".
The Commission is now investigating similar tax practices in all of the 28 nations, including the UK.
Catherine Bearder MEP and chair of the Liberal Democrat EU referendum campaign, said: "This is a game-changer in the fight against corporate tax avoidance.
"By working together across Europe, we can clamp down on tax-dodging and get a fairer deal for British taxpayers and businesses."
The ruling comes after more recent evidence of potential tax avoidance by multinationals emerged, with figures last week showing Facebook paid less than £5,000 in UK corporation tax in 2014.
This came despite the online giant making global profits of 2.9 billion US dollars (£1.9 billion) on revenue of 12.5 billion US dollars (£8.1 billion) in 2014. UK revenues were £105 million.
Accounts for taxi-hailing service Uber also showed yesterday it paid no corporation tax in the UK last year despite making an £866,302 profit.
The annual statement for Uber London Limited revealed it incurred a total tax bill of £22,134, but this was listed as a "deferred tax", which can be rolled over from previous years and into future tax periods, meaning the company technically paid no corporation tax in 2014.
Starbucks claimed there were "significant errors" in the decision.
It added: "We plan to appeal since we followed the Dutch and OECD (Organisation for Economic Co-operation and Development) rules available to anyone."
The group insisted it paid a global tax rate of around 33%, which it said was "well above the 18.5% average rate paid by other large US companies".
Fiat Chrysler also denied receiving any illegal state aid and said a deal it reached with Luxembourg was aimed only at clarifying pricing rules and "did not result in any state aid".
The European Commission said the fight against tax avoidance was one of its top priorities, and in June it unveiled a raft of measures to help tackle the issue.
Marc Sanders, partner at Taxand Netherlands, said the EU rules will "rock the corporate world to its very core".
He added: "Whilst multinationals were lured to EU states with offers of low tax rates as an incentive, little did they know that, despite having agreement at the highest national level, this would come back and bite a decade later."
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