COMPANIES & STRATEGIES - RETAIL

Administrative court

Maxi-Cosi manufacturer sentenced in Luxembourg tax case



Home, sports and childcare: Dorel has an extensive portfolio of brands including Maxi-Cosi baby equipment. (Photo: Shutterstock)

Home, sports and childcare: Dorel has an extensive portfolio of brands including Maxi-Cosi baby equipment. (Photo: Shutterstock)

Luxembourg courts have ordered Canadian manufacturer Dorel to pay €54.6m in taxes, the Montreal-based multinational has confirmed.

From Maxi-Cosi and Quinny childcare products to Cannondale bicycles, Quebec-based Dorel is a heavyweight in the economic fabric of the province with annual sales of $2.6bn.

However, its next quarterly report, due on 5 November, will be marred by a Luxembourg case, the Montreal-based group has announced. The issue is a ruling by the administrative court of Luxembourg, which confirmed on appeal the payment of €54.6m to the grand duchy's tax authorities, according to a press release issued last Friday.

Taxation of asset transfers nailed down

“We are extremely disappointed with this judgment. Dorel conducted its affairs in a fully transparent and legal manner, acting with the advice of our tax and legal professionals. As this is a final decision of the court, we will abide by its decision,” said Martin Schwartz, Dorel’s President and CEO, in a statement.

The heart of the dispute dates back to 2015, when the TSX-listed company underwent an internal corporate reorganisation. The company reportedly got caught in the middle over the taxation of the transfer of certain assets.

Based in the capital, Soparfi Dorel Luxembourg reported a profit of $9.7m for its 2019 financial year.

It should be noted that if the verdict of the Luxembourg administrative court has indeed been confirmed, Dorel is being asked to pay the remaining balance of €38.6m. The group expects a $1.9 impact per share on its earnings, which are to be published this Friday for the third quarter of its fiscal year ending September 30.

Listed since 1987, Dorel Industries is active in the childcare sector with seven brands including Maxi-Cosi, Quinny, Safety 1st and Bébé Confort. The company also has a sports division with six brands including Cannondale bicycles and a Home division dedicated to furniture. The company has 8,900 employees in 25 countries around the world.

This story was first published in French on Paperjam. It has been translated and edited for Delano.