Amazon has been ordered to pay 250 million euros in back taxes to Luxembourg as part of a tax crackdown by the European Commission.
The commission said Luxembourg allowed the retail giant 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.
“Amazon tax benefits are illegal on the EU state aid rules,“European Commission Competition Commissioner Margrethe Vestager told reporters.
“A tax ruling granted by Luxembourg has reduced Amazon’s tax field during more than 8 years between May 2006 and June 2014, it was not justified.”
Watch statement by European Commission Competition Commissioner Margrethe Vestager
Many of the tax deals now being unraveled were enabled by European Commission president Jean-Claude Juncker when he was prime minister of the grand duchy.
Juncker denies any wrongdoing and says the commission is committed to ensuring fair taxation.
Amazon said in response to the commission’s decision that it was considering an appeal.
Oxfam, refering to “cosy deals that let companies slash their tax bills” made the following statement in reaction to the commission’s decision:
“Corporate tax avoidance robs countries around the world of billions each year – money that could be used to fight poverty. Poor countries are hit hardest as they are more dependent on tax revenue from companies to pay for public services like life-saving healthcare and clean water.
Amazon said it believes it “did not receive any special treatment from Luxembourg and that we 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 online retailing giant said in a statement.
The competition commissioner is also taking Ireland to court for failing to recoup tax due from Apple.
It is estimated that EU member states miss out on 160-190 billion euros in tax revenue per year due to corporate tax avoidance.
Amazon revamped its European tax practices in 2015 so that it can book sales and pay taxes in Britain, Germany, Spain and Italy instead of channeling all sales through Luxembourg where it is headquartered, a move which may raise its tax bill.