European Commission ordered Amazon to pay 250 million euros ($294M) to Luxembourg on Wednesday after they found out that the company had been given illegal tax benefits.
Luxembourg’s tiny economy has been benefitting from providing multinational companies with a European base.
Regulators found out that within the years 2006 to 2014, Amazon was given tax benefits that did not have any “valid justification.”
The EU’s commissioner for competition, Margrethe Vestager, stated that illegal tax benefits were given to Amazon by Luxembourg. “As a result, almost three quarters of Amazon’s profits were not taxed,” she noted.
Vestager also said that “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.”
In regards to this, Amazon stated that they are considering an appeal. In a statement released after the announcement, the company said, “We believe that Amazon did not receive any special treatment from Luxembourg,” insisting that they have paid their taxes in “full accordance” with Luxembourg and international tax laws.
The Commission said that the Luxembourg authorities still have to compute the exact amount of tax that they will reclaim from Amazon. A source disclosed that Vestager was considering 400 million euros a year ago, saying that the 250 million euros were significantly smaller.
Apple and Ireland To Face Same Fines
Vestager also added Apple and the Irish government to the mix, using the latter’s failure to recover 13 billion euros ($15.3B) worth of tax last year from the U.S. tech giant as the reason for her decision to take the government into court as well.
“We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But member states need to make sufficient progress to restore competition,” Vestager explained.
The EU commissioner for competition said that EU taking on several U.S. tech giants, in both antitrust and tax avoidance cases, are not based on discrimination against foreign companies.
“This is about competition in Europe, no matter your flag, no matter you ownership,” Vestager clarified.
The Commission said that Ireland was given a deadline to implement its decision until January 03 this year and that until the money is recovered, Apple will continue to benefit from its illegal advantage.
Apple stated that they will appeal the case.
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