Amazon ordered to repay €250 million to Luxembourg in back taxes

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Amazon must repay €250 million to Luxembourg, according to the European Commission, which found that the US company had received illegal tax benefits. (See our analysis here)

The Commission, led by competition commissioner Margrethe Vestager, published its conclusion today, stating that Amazon was granted illegal tax benefits from Luxembourg worth €250 million. This is illegal under EU state aid rules as Amazon paid much lower taxes than other companies.

“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon's profits were not taxed,” said Vestager in a statement. “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.”

The investigation into Amazon’s tax affairs in Luxembourg was launched in 2014. The Commission examined a tax ruling from 2003, which was extended in 2011, that allowed Amazon to shift most of its profits from one Amazon company called Amazon EU to another called Amazon Europe Holding Technologies. The latter was not subject to tax.

Amazon has denied the conclusions of the investigation in a statement:

“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. We will study the Commission’s ruling and consider our legal options, including an appeal. Our 50,000 employees across Europe remain heads-down focused on serving our customers and the hundreds of thousands of small businesses who work with us.”

Today’s conclusion is another major move against US tech giants from the European Commission and Vestager, which previously ruled that Apple owes €13 billion to Ireland in back taxes.

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