News Irish News

Monday 16 September 2019

Now Amazon ordered to repay €250m to Luxembourg in EU clampdown

Amazon is considering an appeal against the ruling. Stock picture
Amazon is considering an appeal against the ruling. Stock picture

Robert-Jan Bartunek

Amazon is the latest US tech company to be caught up in a European Union crackdown on tax deals - as it was ordered to repay about €250m to Luxembourg.

EU Competition Commissioner Margrethe Vestager said: "Luxembourg gave illegal tax benefits to Amazon. As a result, almost three-quarters of Amazon's profits were not taxed."

The fine was much lower than some sources close to the case had expected - and a fraction of the €13bn Apple was ordered to pay to Ireland last year. However, Amazon said it was considering 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," Amazon said in a statement.

Amazon, with 1,500 staff there, is one of the biggest employers in the country of half a million people. It has a Europe-wide staff of some 50,000.

While the exact amount Amazon needs to repay has yet to be calculated, the €250m is significantly less than the €400m that sources claimed was under consideration.

The bill suggests the commission believes Amazon shielded around €900m in EU profits from tax, calculations by Reuters show.

For most of its existence, Amazon has worked on razor-thin profit margins to fuel its global expansion, making only $2.4bn (€2bn) profit on global revenues of $136bn (€115bn) in 2016.

The commission said Luxembourg allowed Amazon to channel a significant portion of its profits to a holding company without paying tax. The holding company was allowed to do this because it held certain intellectual property rights.

Amazon revamped its European tax practices in 2015 so that it can book sales and pay taxes in Britain, Germany, Spain and Italy instead of channelling all sales through Luxembourg where it is headquartered, a move that may raise its tax bill.

Luxembourg, whose tiny economy has benefited from providing a base for multinational companies, rejected the finding and said it was looking at its legal options.

European Commission President Jean-Claude Juncker was prime minister of Luxembourg for almost two decades until 2013. He has been criticised for his role in enabling the many tax deals that are now being unravelled. He denies doing anything wrong and says the commission is committed to ensuring fair taxation.

In 2014, Luxembourg made international headlines in the wake of the publication of 'LuxLeaks', documents that showed how large accounting firms helped multinationals channel proceeds through the country while paying little or no tax.

Although the EU has taken on several US tech companies, Ms Vestager said that her approach was not biased against foreign companies.

She also welcomed the debate kicked off by French President Emmanuel Macron, who called for more integrated corporate tax regimes in Europe, aiming to close the loopholes used to reduce tax bills.

Irish Independent

Editor's Choice

Also in Irish News