The European Commission on Wednesday ordered Amazon to pay around €250 million (nearly Rs 1,913 crore) to Luxembourg for receiving illegal tax benefits. The case is related to the tax advantages that the online retailer received between 2006 and 2014 from Luxembourg, without any “valid justification”, the Commission said.
“Luxembourg gave illegal tax benefits to Amazon,” the European commissioner for competition, Margrethe Vestager, said in a statement. “As a result, almost three quarters of Amazon’s profits were not taxed. 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.”
Vestager said member states of the EU cannot give selective tax benefits to some multinational groups.
Investigations showed that the e-commerce retailer was shifting profits from a company that was subject to tax in Luxembourg, to another company – Amazon Europe Holding Technologies – which was not subject to tax. The holding company did not have any employees, offices or business activities.
Amazon, however, countered that it did not receive any special treatment from Luxembourg and had paid the tax in full accordance with international tax law. It added that it will consider legal options to appeal against the European Commission’s ruling.
“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,” Amazon said in a statement, according to CNBC.