EU: Amazon must pay back €250 million in unfair tax benefits

It's up to Luxembourg to recover the money.

Updated ·2 min read

The European Commission says that Amazon received tax benefits from member country Luxembourg that totalled around €250 million. Under EU State aid rules, this is illegal and the country has been told it must recover this sum. Amazon was able to pay substantially less tax -- the commission says the company was paying four times less than other local companies.

Commissioner Margrethe Vestager said: "Following an in-depth investigation launched in October 2014, the Commission has concluded that a tax ruling issued by Luxembourg in 2003, and prolonged in 2011, lowered the tax paid by Amazon in Luxembourg without any valid justification."

Amazon moved its profits from a group that is subject to tax in Luxembourg to one that wasn't, resulting in a substantially lower tax bill. The shell company had no offices or staff, but was used solely for evading tax. The antitrust regulator says this let Amazon avoid taxation on three quarters of the profits it made from all Amazon sales in the EU.

Amazon sent Engadget this statement:

"We believe that Amazon did not receive any special treatment from Luxembourg and that 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. Our 50,000 employees across Europe remain heads-down focused on serving our customers and the hundreds of thousands of small businesses who work with us."

There are no EU fines here. The rules outline that the country needs to recover the sum of benefits to "remove the distortion of competition created by the aid". The Commission has worked out the difference between what the company paid in taxes and what it should have without Luxembourg's tax ruling -- around €250 million, plus interest. The onus is now on the tax authorities of Luxembourg to determine the precise amount of unpaid tax. Vestager suggests that Amazon will have to repay these benefits to Luxembourg.

The European Commission's findings follow its recent investigation into Google's shopping listings -- and the resulting record fine. There were also more developments today in its tax dealings with Apple and Ireland.