EU orders Amazon to pay back €250 million of “illegal” tax breaks

EU competition chief Margrethe Vestager has ordered Amazon to pay back “illegal” tax benefits to Luxembourg, amounting to around €250 million (£221 million). 

EU orders Amazon to pay back €250 million of “illegal” tax breaks

The move is the latest example of the European Commission’s crackdown on tax avoidance by multinational companies. It comes on the same day that the commission announced an intention to rebuke Ireland for failing to collect taxes, worth €13 billion (£12 billion), from Apple.

“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three-quarters of Amazon’s profits were not taxed,” Vestager said in a statement.

According to Reuters, €250 million is less than the figure that had been suggested by sources prior to the European Commission’s announcement. That said, the exact figure levies at Amazon still needs to be calculated by Luxembourg authorities, so it could exceed Vestager’s amount.

Alongside the order for Amazon to pay back millions in back taxes, the European Commission said it would refer Ireland to court for a failure to recover illegal tax benefits from Apple. “We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist,” a statement reads. “But Member States need to make sufficient progress to restore competition. That is why we have today decided to refer Ireland to the EU Court for failing to implement our decision.”

Vestager added that she hopes “both decisions are seen as a message that companies must pay their fair share of taxes”.

Amazon has responded with a statement that it will consider its legal options: “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. 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.”

Today’s move by the EU will likely stoke anger from US tech companies, which have previously accused the European Commission of unfairly targeting the sector. When the EU originally serves Apple with a €13 billion bill, Tim Cook called the tax investigations “political crap”.

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