European competition commissioner Margrethe Vestager has ordered Amazon to pay back around €250 million (£221.5m) in back taxes, plus interest, after ruling that Luxembourg gave the e-commerce giant illegal tax benefits for eight years.
"Amazon's tax benefits are illegal under EU state aid rules," Vestager said, explaining that local companies were paying four times as much as Amazon. “Almost three-quarters of Amazon’s profits from all its sales in Europe were not taxed.”
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In 2003, Amazon struck a deal with Luxembourg’s tax authorities to establish a non-tax-paying holding company in the country. A lengthy Commission investigation concluded that this allowed Amazon to filter the bulk of its European profits between 2006 and 2014 through the holding company, effectively avoiding taxes.
“The holding company was an empty shell,” Vestager said. “It had no employees, no offices, no business activities… It did not and could not perform any activity to justify the level of payments received.”
Amazon is considering its options. “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," a spokesperson told WIRED. "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.”
Vestager’s ruling echoes her decision on Apple’s tax benefits in Ireland, which she declared “illegal” in 2016. The Danish competition commissioner ruled that the firm had colluded with the Irish government to pay an effective tax rate of 0.05 per cent – and that it owed Ireland back taxes totalling €13 billion (£11bn), plus interest. (Both parties have appealed.)
Vestager also announced that she was referring Ireland to the European Court, as it had not made progress in recovering the money from Apple. “Ireland has still not recovered any money, not even in part,” she said. “Recovery in certain cases is more complex than in others, but member states need to make sufficient progress.”
This article was originally published by WIRED UK
