The EU competition authority has concluded that the retail giant accepted “illegal” tax benefits from Luxembourg, and will have to pay €250 million in back taxes.

By Joe McDonough


Posted on October 5, 2017

After a three-year investigation, the European Union has found Amazon to have breached the EU state aid rule.

The EU competition authority has concluded that the retail giant accepted “illegal” tax benefits from Luxembourg, and will have to pay €250 million in back taxes.

“Luxembourg gave illegal tax benefits to Amazon,” antitrust chief Margrethe Vestager said on Wednesday. “As a result, almost three quarters of Amazon’s profits were not taxed.

“In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules. This is illegal under EU state aid rules. Member states cannot give selective tax benefits to multinational groups that are not available to others.”

Amazon rebuked the findings, and is considering an appeal.

“We believe that Amazon did not receive any special treatment from Luxembourg and that we paid tax in full accordance with both Luxembourg and international tax law,” it stated.

“We will study the Commission’s ruling and consider our legal options, including an appeal.”

Luxembourg is also understood to be considering its legal options. Incredibly, European Commission President Jean-Claude Juncker was prime minister of Luxembourg for almost two decades until 2013. He has denied any wrongdoing.

Reuters reports that Luxembourg is also under EU scrutiny over tax deals with McDonald’s and French energy company Engie. The nation also appealed against a ruling in 2015 that automaker Fiat should pay it back taxes.

Apple and Ireland

Amazon’s imposed penalty is a far cry from the €13 billion Apple was told to pay Ireland in 2016 for the same breach.

The European Commission said on Wednesday, that it was taking Ireland to the European Court of Justice for its failure to recover even “a portion” of said sum by the deadline of January 3 this year.

“More than one year after the Commission adopted this decision, Ireland has still not recovered the money,” Margrethe Vestager said.

“We, of course, understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But member states need to make sufficient progress to restore competition.”