The European Commission (EC) has made the decision that Luxembourg has grated undue tax benefits to Amazon that amounted to a state subsidy of the online giant. It has ruled that Luxembourg must claw back €250 million in taxes that were avoided through basing its EU operations there.

In a statement, the EC Commissioner in charge of competition policy, Margrethe Vestager, said: “Luxembourg gave illegal tax benefits to Amazon. As a result, 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. This is illegal under EU State Aid rules. Member States cannot give selective tax benefits to multinational groups that are not available to others.”

The EC ruling and investigation centred on a tax ruling issued by Luxembourg in 2003, and prolonged in 2011, which the EC claimed “lowered the tax paid by Amazon in Luxembourg without any valid justification”.

While Amazon argues that it didn’t receive any ‘special treatment’, the EC is known to be going after computer and handheld hardware giant Apple who did a similar deal with Ireland. It seems that even when corporate giants head to little countries to take advantage of their tax rules, the EU is watching closely and that is not a great thing when a supranational governmental organisation goers after a multinational corporation. Amazon and its fellow giants may have nowhere to hide for the time being…

 
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