Amazon must repay £220m bill it avoided under Juncker’s tax deal
‘This is about competition’
AMAZON was yesterday ordered by the EU to pay £222million in overdue taxes which it evaded as part of an illegal deal with Luxembourg.
Brussels said the internet shopping giant failed to pay tax on more than three-quarters of its European profits for eight years.
The aggressive ruling is the latest attack on a US tech giant by the EU.
It also raises questions about the role of European Commission President, JeanClaude Juncker, as he was Luxembourg’s prime minister and finance minister when the arrangement was agreed.
But, despite branding the deal illegal and without justification, officials refused to elaborate on his involvement.
The huge bill is the latest in a string of penalties against major US firms for abusing tax rules or exploiting their market dominance. It comes months after EU regulators ordered Google to pay £2billion and Apple was handed an unprecedented £11.5billion tax bill in August 2016.
Yesterday Margethe Vestager, the European Commissioner who led the investigations, said the Grand Duchy had offered Amazon ‘illegal tax benefits’.
A Luxembourg ruling in 2003 gave it a ‘selective economic advantage’ by allowing it to channel inflated payments through a shell company which paid no tax.
This let Amazon, which at this time funnelled its EU profits through Luxembourg, to pay four times less tax than local firms.
‘This is illegal under EU state aid rules,’ Miss Vestager said. ‘Member states cannot give selective tax benefits to multi-national groups that are not available to others.’
She denied accusations that US firms were being targeted, saying: ‘This is about competition, no matter your flag, no matter your ownership. Doing business in Europe is about paying your taxes.’
It is understood another EU inquiry into McDonald’s will conclude within weeks. ‘I don’t think we’ve changed the whole corporate culture yet,’ Miss Vestager warned.
The Amazon probe was launched in October 2014, weeks before Mr Juncker became president. He has repeatedly denied any wrongdoing in the so-called Luxleaks scandal in which hundreds of multi-national companies cut their tax payments via complex financing deals with his home country.
Amazon said: ‘Amazon did not receive any special treatment and paid tax in full accordance with Luxembourg and international law. We will consider our legal options.’
Ireland was referred to the European Court of Justice yesterday for failing to collect Apple’s £11.5billion bill. A sweetheart deal with Dublin effectively let the US giant pay low taxes on its European profits.