Just tax it! Nike vs European Commission (полный текст) In January 2019, the European Commission (EC) launched an investigation into the tax affairs of Nike group companies. This investigation forms part of the EU’s wider examination of the tax breaks given to multinational companies by member states in order to attract large corporations to their home market.
Similar investigations resulted in Apple paying a EUR14.3 billion fine to the Irish government, Amazon paying EUR 283 million to Luxembourg, and the 2017 investigation into the IKEA group in the Netherlands, which is still ongoing. 
The Commission is particularly interested in the activities of two companies belonging to the Nike group: Nike European Operations Netherlands BV and Converse Netherlands BV which produce and sell Nike and Converse products in Europe, the Middle East and Africa (EMEA).
According to the EC investigation, the Companies received a licence to use trademarks in the EMEA region from companies that are tax resident in the Netherlands that are also members of the Nike group. Thus, part of the income from the sale of the Company's products is paid in the form of royalties to other related companies of the Nike group in the Netherlands.
The peculiarity of the companies that own the rights to Nike trademarks is their legal form - commanditaire vennootschap (CV). This legal form is popular among non-residents, because with the appropriate structuring of the enterprise, it makes it possible to avoid taxation in the Netherlands. According to local law, profits obtained through a CV are considered earned directly by the owners of the company. Thus, if a non-resident owns a company which is structured as a CV, the income of the company is considered to be received outside the Netherlands and cannot be taxed domestically.
The Commission also notes that between 2006 and 2015, the Dutch tax authorities issued 5 tax rulings approving the method for calculating royalties for the use of the trademarks. Two of these rulings are still in force.
The International Consortium of Investigative Journalists, note that the Nike group’s average rate of income decreased from 34.9% to 24.8% between 2001 and 2014. Following registration of the subsidiaries in the Netherlands which is structured as a CV, this figure decreased to 13.2% by 2017. During this period, the group's after-tax profit increased by 55%, to USD1.88 billion. 
Nike position: The group of companies complied with the same tax laws as other companies operating in the Netherlands.
The EC position: the royalty rate adopted by the Nike group, following the decisions of the tax authorities may not be an accurate reflection of the true value of the trademarks. The royalty rate is higher than that which might be negotiated among themselves by independent companies and does not comply with the arm's length principle.
The position of the Netherland’s Government: The Ministry of Finance has agreed to cooperate with the EC and expressed its hope that the results of the investigation will ensure a uniform approach to taxation for all market participants.  The authorities also issued an assurance that they would not create corporate structures with preferential tax treatment and that they would completely revise the royalty tax system by 2021. 
The EC investigation will focus on examining if there were inconsistencies or errors in the methodology for calculating the royalty rate by paid by Nike group companies from 2006, which may have led to an underestimates of tax due. If this is established, it can be a lower rate of tax than other independent companies or groups of companies.
Ihor Mykhailychenko, Consultant, Transfer Pricing, KPMG in Ukraine