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EU orders Amazon to pay back EUR250m in taxes to Luxembourg

RBR Staff Writer Published 06 October 2017

The European Commission has ordered online retailing giant Amazon to repay around €250m undue tax benefits granted by Luxembourg.

Amazon has paid significantly less tax than other businesses which is illegal under EU State aid rules.

After three years of in-depth investigation which was launched in October 2014, the Commission has divulged that a tax ruling issued by Luxembourg in 2003 through 2011, has reduced the tax paid by Amazon in Luxembourg without any valid justification.

In fact, the tax ruling allowed Amazon to convert its major profits from an Amazon group company subject to tax in Luxembourg (Amazon EU) to a company which is not subject to tax (Amazon Europe Holding Technologies) that has reduced Amazon EU's taxable profits.

The Commission has revealed that Amazon was provided with an economic advantage of paying less tax than other companies subject to the same national tax rules. 

Tax ruling has backed the level of royalty payments which were supposed to be paid by Amazon.

Amazon did not pay the tax levied on three quarters of the profits it gained from all Amazon sales in the EU.

Commissioner Margrethe Vestager said: "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."

Image: European commission flag in Brussels. Photo: Courtesy of Corentin Béchade.