Amazon has been hit by a European Union order to pay €250 million ($294 million) plus interest in back taxes to Luxembourg, as the world’s biggest online retailer became the latest US giant to fall foul of the bloc’s state-aid rules.
The European Commission also said that it is suing Ireland for failing to recoup last year’s record €13 billion bill from Apple, Inc.
“Luxembourg gave illegal tax benefits to Amazon [and] as a result, almost three quarters of Amazon’s profits were not taxed,” EU Competition Commissioner Margrethe Vestager said via an emailed statement.
Tax Crackdown
The Amazon decision adds to a growing list of scalps for Margrethe Vestager in her crackdown on tax loopholes. It follows the Apple decision last year, which reverberated across the Atlantic, with the EU accusing Ireland of granting unfair deals that reduced the company’s effective corporate tax rate.
At stake in all these decisions are billions of euro that multinational companies have squirreled away in tax havens, out of the reach of authorities in the countries where they make most of their sales.
Amazon, which said that it will have 65,000 employees by the end of this year, denied receiving special treatment.
“We paid tax in full accordance with both Luxembourg and international tax law,” Amazon said via an emailed statement. “We will study the commission’s ruling and consider our legal options, including an appeal.”
The EU is targeting what it views as unfair tax practices that give a selective advantage to some companies to attract their business and the jobs attached. The same team is poised to rule on McDonald’s tax affairs in Luxembourg in the coming weeks, according to three people familiar with the cases who spoke on condition of anonymity.
Competition watchdogs are also weighing a more general crackdown on special tax deals that EU countries offer big corporations.
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