EU commissioner fines Amazon €250m
Company was given unfair tax advantage in Luxembourg
THE EU YESTERDAY ordered the world’s largest online retailer Amazon to pay back about €250 million (R4 billion) in taxes to Luxembourg, saying it was given an unfair tax advantage from 2003.
Joining other US tech giants in the sights of EU antitrust chief Margrethe Vestager, Amazon said it was considering an appeal over the payment, though it was less than some close to the case had expected and a small fraction of the €13bn that Apple was ordered to pay to Ireland last year.
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed,” competition commissioner Vestager said. The commission said the exact amount of tax to be reclaimed would still need to be calculated by Luxembourg authorities.
Luxembourg, whose tiny economy has benefited from providing a welcoming European home for multinational companies, rejected the finding and said it was looking at its legal options. The €250m is significantly less than the €400m which sources close to the matter said a year ago that Vestager was estimating then.
The commission said Luxembourg allowed Amazon to channel a significant portion of its profits to a holding company without paying tax. The holding company was allowed to do this because it held certain intellectual property rights.
“The commission’s investigation showed that the level of the royalty payments, endorsed by the tax ruling, was inflated and did not reflect economic reality,” the commission said.
Amazon, which employs 1 500 in the grand duchy, is one of the biggest employers in the country of half a million people. It has a Europe-wide staff of some 50 000.
“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,” Amazon said.
In 2016, Amazon made a $2.4bn (R32.76bn) profit on global revenues of $136bn.
European Commission President Jean-Claude Juncker was prime minister of Luxembourg for almost two decades until 2013 and has been criticised for his role in enabling the many tax deals which are now being unravelled.
In 2014, Luxembourg made international headlines in the wake of the publication of “LuxLeaks”, documents which showed how large accounting firms helped multinational companies channel proceeds through the country while paying little to no tax.
Luxembourg is also under EU scrutiny over tax deals with fast food chain McDonald’s and French energy company Engie. – Reuters