Amazon.com was ordered on Wednesday to repay $294 million for what the European Union called illegal tax advantages.
Oct. 4 (UPI) — Online retailer Amazon was ordered on Wednesday to repay nearly $300 million in back taxes by the European Union, for what it called illegal advantages.
A statement by Margrethe Vestager, EU commissioner of competition policy, said an Amazon deal with Luxembourg amounted to illegal state aid, giving the company an unfair advantage.
The EU’s total bill to Amazon is $294 million.
The decision came after a three-year investigation that concluded Luxembourg lowered taxes on Amazon’s profits without justification.
The EU said Luxembourg allowed Amazon to transfer the majority of its profits from a company, Amazon EU, which is subject to taxation, to Amazon Europe Holding Technologies, which is not subject to tariffs. The probe said the transactions allowed the company to significantly reduce its taxes.
The EU referred to AEHT as a tax shelter with no office or employees. Amazon implemented the structure to avoid tax payment, Vestager said, between 2006 and 2014.
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed,” Vestager said. “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.”
Amazon did not immediately respond to Wednesday’s order.
In a separate statement Wednesday, the European Commission, the regulating agency of the EU, said it will take Ireland’s government to court over its failure to collect $15.3 billion in unpaid taxes from Apple.
The Irish government was ordered to collect the tax for a similar situation by January 3.
“Ireland has still not recovered the money,” Vestager said. “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.”