Amazon owes $300 million in taxes, says EU

EU vs Big U.S. Tech Companies, part 2.

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In a ruling that echoes the Apple one of last year, European competition commissioner Margrethe Vestager has told Amazon that it has to pay around €250 million ($290 million) in back taxes.

That's after an in-depth, three-year-long aid investigation from the Commission concluded Luxembourg gave illegal tax benefits to Amazon of around that sum.

"As a result, almost three quarters of Amazon's profits were not taxed," Vestager said. "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," she added.

Luxembourg issued a tax ruling in 2003 which allowed Amazon to move the majority of its profits from a taxed company, Amazon EU, to a non-taxed one, Amazon Europe Holding Technologies.

That enabled Amazon "to avoid taxation on three quarters of the profits it made from all Amazon sales in the EU," the press release said.

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Amazon said in a statement: “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." The company will consider legal options, including an appeal.

The commissioner's assessment of the holding company is particularly damning. While the operating company "was the only entity actively taking decisions and carrying out activities" linked to Amazon's EU business, the holding company was "an empty shell that simply passed on the intellectual property rights to the operating company for its exclusive use."

"The holding company was not itself in any way actively involved in the management, development or use of this intellectual property," the release continued. "It did not, and could not, perform any activities, to justify the level of royalty it received."

Last year, the European Commission established that Ireland violated EU law on competition by giving Apple "undue tax benefits of up to €13 billion."

In a separate ruling, Vestager said she was referring Ireland to the European Court of Justice (ECJ) for failing to recover that sum from Apple.

She commented on the ruling:

"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.

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."

UPDATE: Oct. 4, 2017, 12:46 p.m. BST Added statement from Amazon.

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