EU commission issues Amazon with €250m tax bill

The EU Commission is pursuing Amazon for money it says it owes in taxes as the ‘off-shoring’ scandal rumbles on. And now they’re also aiming fire at the Irish Government, which it says isn’t doing enough to enforce a previous ruling regarding Apple too and collect the correct tax owed.

Margrethe Vestager is the EU commissioner in charge of competition, and she has ruled that Luxembourg’s “illegal tax advantages to Amazon” mean that they have not paid on just about almost three-quarters of the company’s profits to go untaxed and giving it an illegal advantage over local competitors.

Vestager says: “This is an illegal practice under EU state aid rules. Member states may not grant selective tax concessions to multinational groups to which other companies do not have access.”

The Commission states that Amazon has benefitted from a tax deal granted by the Luxembourg government that allowed the company to reduce its tax bill by €250m from 2006 to 2014. Amazon has been ordered to pay that sum, plus interest, but has so far refused to comply.

Needless to say Amazon rejects the Commission ruling and says the off-shoring deal available in Luxembourg was freely available and not a special perk or deal.

Amazon said in a 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.”

Luxembourg’s government is also unrepentant: “As Amazon has been taxed in accordance with the tax rules applicable at the relevant time, Luxembourg considers that the company has not been granted incompatible state aid.”

Ireland isn’t terribly amused by being threatened with action in the European Court of Justice either for failing to collect 13 billion Euros supposedly owed by Apple calling the decision “extremely regrettable”.

The Irish government said this week: “Irish officials and experts have been engaged in intensive work to ensure that the state complies with all its recovery obligations as soon as possible, and have been in constant contact with the European commission and Apple on all aspects of this process for over a year.”

Amazon and Apple are not alone and other firms that are under scrutiny by the EU Commission for similar practices include Fiat and Starbucks.

The really rather delicious irony is that EU Commission president Jean-Claude Juncker was Luxembourg’s Prime Minister from 1995 up until 2013 and, during a great deal of that period also served as finance minister too. He presided over the government that made the tax arrangements possible and now heads up the organisation that is condemning the same deals.