Following a three-year investigation, the European Commission has ordered Amazon to pay €250 million ($293 million) in back taxes. Delivering the ruling Wednesday, competition commissioner Margrethe Vestager said that the e-commerce giant had been given undue tax benefits in Luxembourg, which is “illegal under EU state aid rules.”
“Almost three quarters of Amazon’s profits were not taxed. In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules,” Vestager said.
The tax regime which applied to Amazon stems from a ruling issued by Luxembourg in 2003 and extended in 2011. The E.C. claims that under the Luxembourg ruling, Amazon was able to “shift the vast majority of its profits from an Amazon group company that is subject to tax in Luxembourg (Amazon EU) to a company which is not subject to tax (Amazon Europe Holding Technologies).”
Reacting to the European Commission’s order to pay back taxes, Amazon said in a statement it “did not receive any special treatment from Luxembourg.” “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,” the company said.
The crackdown on Amazon is part of a larger drive launched by the European Commission after it determined that Belgium had granted selective tax advantages to at least 35 multinationals.
Vestager also said the commission was ready to take Ireland to the European Court of Justice for its failure to collect €13 billion ($15.2 billion) in back taxes from Apple. In August 2016, the commission found that Ireland had granted undue tax benefits to Apple and had ordered Ireland to retrieve the back taxes from Apple by Jan. 3.