London - Online giant Amazon has been ordered to repay 250 million euros (222 million pounds) in back taxes after receiving 'undue' subsidies from Luxembourg.
The ruling from the European Commission comes after a three-year investigation into Amazon's tax payments, which the commission previously opened in October 2014. The commission has concluded that a tax ruling made in Luxembourg in 2003 and extended in 2011 lowered the tax paid by Amazon in Luxembourg without any valid reason.
This then allowed Amazon to shift the "vast majority" of its profits from Amazon EU to a company which was not subject to tax, Amazon Europe Holding Technologies, a move which "significantly" reduced Amazon’s taxable profits. The EU Commission ruled that the move subsequently let Amazon avoid taxation on "three-quarters of the profits it made from all Amazon sales in the EU."
"Luxembourg gave illegal tax benefits to Amazon," said Commissioner Margrethe Vestager, who is in charge of competition policy. "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 US-based online giant has refuted the claims concerning its back taxes. "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," said a company spokesperson.
"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," added the spokesperson.
Photo: via Flickr