The European Commission has ordered Amazon to pay back EUR 250 million in unpaid takes after ruling that it benefited from illegal state aid from Luxembourg. The decision, which confirms recent reports, follows a three-year probe into tax arrangements between the US online retailer and Luxembourg, with the European Commission having already ruled that the 2003 sweetheart deal "constituted state aid". In a statement, EU competition commissioner Margrethe Vestager said Luxembourg’s “illegal tax advantages to Amazon” had allowed almost three-quarters of the company’s profits to go untaxed, meaning it paid four times less tax than rival local companies.
Specifically, the EC said the tax ruling issued by Luxembourg in 2003 and prolonged in 2011 had allowed Amazon to artificially reduce its tax bill by EUR 250 million from 2006 to 2014 without any valid justification. “This is an illegal practice under EU state aid rules,” said Vestager, adding that “member states may not grant selective tax concessions to multinational groups to which other companies do not have access.” The US company must now repay the full amount plus interest.
Both Amazon and Luxembourg said they had taken notice of the EC’s decision but denied its findings. Amazon said it believed it did not receive any special treatment from Luxembourg and that it paid tax "in full accordance with both local and international tax law", while the government of Luxembourg said Amazon had been taxed in accordance with the tax rules applicable at the relevant time. Both reserved the right to appeal against the ruling.
The EC’s ruling comes after the EC ordered Apple to repay EUR 13 billion in Irish back taxes last year. In that regard, Vestager also announced that the Commission would be lodging an appeal before the European Court of Justice to ensure Ireland recoups the full amount. The Irish government immediately described the decision to take the case to Europe’s highest court as “extremely regrettable” and insisted it was making “significant progress” in recovering the taxes from Apple.
