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European Commission 'questions Amazon's tax affairs in Luxembourg'

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European Commission 'questions Amazon's tax affairs in Luxembourg'
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The European Commission is reportedly widening its investigation into how multinational companies use countries such as Luxembourg to cut their tax bills – with US online retailer Amazon in its sights.

The Financial Times says EU officials have asked Luxembourg to hand over documents relating to Amazon’s tax affairs in the country.

Sources told the FT Brussels wants to check whether decisions on corporate tax comply with restrictions on state aid.

Britain, France and Germany have called for stricter rules to stop companies such as Amazon, Google and Apple aggressively avoiding taxes.

Luxembourg is used by many multinationals including online retailer Amazon, building equipment maker Caterpillar and UK mobile telecoms group Vodafone.

“The Commission continues to gather information on the tax practices of member states… and this might lead to new formal investigations,” an EU official told Reuters.

Adding “It would be premature to speculate on whether… formal investigations could be opened about any specific company.”

The official declined to be named because of the sensitivity of the matter.

In a strongly worded statement in March, the Commission, which is the EU executive, chastised Luxembourg, saying it had “failed to adequately answer previous requests for information” and ordered it to outline many details of its tax system.

The finance ministry in Luxembourg has previously said it had “doubts about the legality of certain aspects of the European Commission’s information requests”.

Last month, the Commission warned Ireland, another EU country that offers companies offshore tax status, that it could widen its investigation into European tax practices.

It is already looking at technology firm Apple’s tax arrangements with the Dublin government.