Dutch judges have fined British American Tobacco more than €100 million for avoiding taxes in the Netherlands in 2016, as part of a wider legal battle between BAT and the tax office.

The Dutch tax office claims BAT moved more than €4 billion in profits between 2003 and 2016 to reduce its tax liabilities, of which €1.7 billion was shifted abroad in 2016.

The company court has now fined BAT €107 million because of the seriousness of the offence which is to the “detriment of the community interest and those of honest tax payers”, the court said.

The tax office had demanded a fine of €126 million but the court reduced that fee because of the length of time the investigation had taken. But BAT will also have to pay €1.6 billion in back taxes.

The tax office said in a reaction that it was pleased with the outcome of the case, but BAT said it is considering an appeal.

The dispute centres on fees paid by Dutch subsidiaries for loans provided via the UK holding company. These fees, the Dutch tax office says, were inflated artificially to reduce the Dutch arm’s tax liabilities.