The European Commission has ordered Luxembourg to collect $294 million from Amazon after an in-depth investigation found the online retailer had received illegal tax benefits. According to the findings, the American ecommerce giant was given undue benefits between 2006 and 2014 without any “valid justification.”
"Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon's profits were not taxed," Margrethe Vestager, the EU's commissioner for competition, said 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 European Commission began its investigation into Amazon and Luxembourg's tax arrangements in October 2014. The EU had promised to review tax arrangements between large multinationals and its 28 member states.
Luxembourg is now being ordered to recoup the €250m in back taxes, plus interest. The Luxembourg authorities said they will "use appropriate due diligence to analyze the decision." Amazon has also responded to the news. It maintains it did not receive any special treatment from Luxembourg and that it 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," the company said in a statement.
The European Commission has also decided to refer Ireland to the European Court of Justice for failing to recover €13 billion in unpaid taxes from Apple. In 2016, it ruled that Ireland's tax benefits to Apple were illegal under EU State aid rules, because it allowed Apple to pay substantially less tax than other businesses. The commission said the deadline for Ireland to implement its decision had been January 3 2017.
"Ireland has to recover up to 13 billion euros in illegal State aid from Apple. However, more than one year after the Commission adopted this decision, Ireland has still not recovered the money, also not in part,” Margrethe Vestager said in an EU press release. “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. That is why we have today decided to refer Ireland to the EU Court for failing to implement our decision.”
Ireland’s Taoiseach Leo Varadkar has described the commission's decision as "wholly unnecessary and unwarranted at this time.” The country’s Department of Finance also reacted to the news, saying that it had always “been clear that the Government is fully committed to ensuring that recovery of the alleged Apple state aid takes place without delay and has committed significant resources to ensuring this is achieved.”
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