The European Commission moves forward, hitting Amazon and Luxembourg as the world’s biggest online retailer broke the EU’s rules of government subsidies. The EU ordered Amazon.com to pay €250 million intonest in back taxes to Luxembourg, after investigating its sweetheart tax deal. The structure that allowed Amazon to enjoy selective tax benefits was in place from May 2006 to June 2014, according to the EU executive. Today, Amazon has changed to a new structure that is outside the scope of this state aid investigation.
After the EU Competition watchdog, Commissioner Margrethe Vestager went public with Apple’s €13 billion bill to Ireland. “Governments cannot give selective tax benefits to multinational groups that are not available to others,” said the Commissioner, underlining that “Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules” and “this is illegal under EU state-aid rules.”
But while the European Commission’s bill for Amazon is far less than Apple’s, the message from Vestager was just as clear, as the list of cases for the EU watchdog grows. The EU said that Amazon’s tax rulings endorsed inflated tax-deductible royalty payments for intellectual property to a unit that wasn’t subject to corporate tax, as the arrangement significantly reduced its European firm’s taxable profits and “did not reflect economic reality.”
Vestager hinted on Wednesday that the Amazon decision is just the latest in a long line of decisions in the pipeline. “I don’t think that we’re done,” she told the Brussels press corps. According to an EU official, Brussels are expected to rule on McDonald’s Luxembourg tax affairs in the weeks to come, while a more general attack on special tax deals between big corporations and several EU member states is expected.