BRUSSELS – The European Commission ordered Luxembourg on Wednesday to recover 250 million euros ($294 million) from online retail giant Amazon relating to unpaid taxes after finding that the Grand Duchy had granted it unlawful fiscal benefits.
The Commission found that Luxembourg applied tax laws that allowed Amazon to pay four times less tax than local companies subject to the same rules.
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three-quarters of Amazon’s profits were not taxed,” said European Commissioner for Competition Margrethe Vestager in a statement.
“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 Danish politician added.
The Commission investigation, which dates back to 2014, concluded that a tax law issued by Luxembourg in 2003 and bolstered in 2011, allowed Amazon to shift its profits between two company groups, Amazon EU, which is subject to tax, and Amazon Europe Holding Technologies, which is not.
In this manner, Amazon managed to avoid paying taxes on three-quarters of its profits in the European Union, the Commission statement said.
Amazon rejected the ruling and said it would study a legal response, which could include an appeal.
“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,” the company said in a statement.
Luxembourg also insisted that it had not provided Amazon with state aid.
“Luxembourg has been fully cooperating with the Commission in its investigation and is strongly committed to tax transparency and the fight against harmful tax avoidance,” a government spokesperson said.
The Commission order Luxembourg to recoup the 250 million euros as soon as possible to ensure that Amazon did not continue benefiting from its tax system in the Grand Duchy.