Unic Press UK: European Commission said Wednesday that Luxembourg granted undue tax benefits of around €250 million ($293.4 million) to Amazon, an online retail leviathan.
During a 3-year investigation, the European Union (EU) institution unraveled that the tax ruling by Luxembourg in 2003, and prolonged in 2011, had lowered the tax paid by Amazon in Luxembourg without any valid justification. The tax benefit granted to Amazon is illegal under EU State aid rules, having allowed Amazon to pay substantially less tax than other businesses, the European Commission said in a press release Wednesday.
“Luxembourg gave illegal tax benefits to Amazon. 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,” Commissioner Margrethe Vestager, in charge of competition policy, said.
Amazon took advantage of the tax ruling in 2003, and the 2011 extension, to shift a significant portion of its profits from an Amazon group company that is subject to taxes in Luxembourg (Amazon EU) to a company which is not subject to taxes (Amazon Europe Holding Technologies), the European Commission said.
The findings of the European Commission are the result of in-depth investigation, which was launched in October 2014, to investigate transfer pricing arrangements on corporate taxation of Amazon in Luxembourg.
The subsisting EU State aid rules stipulate that the taxes unpaid be recovered in full to uphold a level playing ground that is devoid of distortions that affect competition. This means that Amazon will pay the taxes €250 million ($293.4), and there would be no fines or penalties under EU State aid rules.