EU to decide Amazon tax break case: sources

October 3, 2017
The EU is set to decide a landmark case against Luxembourg, which stands accused of giving illegal tax breaks to internet shoppi
The EU is set to decide a landmark case against Luxembourg, which stands accused of giving illegal tax breaks to internet shopping giant Amazon, sources say.

The EU will on Wednesday decide a landmark case against Luxembourg, which stands accused of giving illegal tax breaks to internet shopping giant Amazon, according to two sources familiar with the matter.

If confirmed, a ruling against Amazon would come a year after the EU decided that US tech icon Apple had received similar favourable tax terms and ordered it to repay 13 billion euros ($14.5 billion) in back-taxes to Ireland.

A decision against tech giant Amazon would also land a few months after the EU slapped Google with a record 2.4-billion-euro ($2.8-billion) fine for illegally favouring its shopping service in search results.

A report in the Financial Times said that Amazon would face a tax bill of several hundred million euros, although this could not be confirmed by AFP sources on Tuesday.

The commission, Amazon and the government of Luxembourg refused to comment.

Launched three years ago, the European Commission's probe into Amazon's deals with Luxembourg was part of several investigations into sweetheart tax arrangements between major companies and several EU countries.

Many came in the wake of the "Luxleaks" scandal which revealed details of tax breaks given by Luxembourg to dozens of major firms.

The revelations about the Luxembourg tax deals came as a particular embarrassment for European Commission President Jean-Claude Juncker, who served nearly 19 years as Luxembourg's prime minister, covering the period when the tax deals were made.

In similar cases, Europe's anti-trust chief Margrethe Vestager decided against the tax deals for coffee-shop chain Starbucks by the Netherlands and Italian automaker Fiat by Luxembourg—both companies were ordered to pay roughly 30 million euros.

The European Commission, the EU's powerful executive arm responsible for policing its competition rules, opened the probe in 2014 in the belief that Luxembourg's tax favours to Amazon constituted state aid.

Accordingly, the arrangement may have given the company an unfair advantage over competitors and would therefore be illegal.

But the biggest decision was by far against Apple in Ireland, which shocked Washington. The iPhone maker, as well as Ireland, have appealed the decision.

Once found at fault, a country must recover the amount granted in illegal state aid, potentially a huge amount of money given that some of the tax deals date back many years.

Explore further: Transatlantic tussles: EU cases against US firms

Related Stories

EU tax move on Apple not anti-US bias: Vestager

September 19, 2016

Europe's powerful Competition Commissioner Margrethe Vestager said Monday that the EU order for Apple to pay $15 billion in taxes did not represent any bias against US companies.

American tech giants under EU cosh

April 20, 2016

US technology giants Google, Amazon, Apple, Intel and Microsoft have all come under the often costly scrutiny of European Union (EU) authorities in Brussels:

Apple to fight record EU tax bill (Update 4)

August 30, 2016

Silicon Valley tech titan Apple will fight an EU demand for a record 13 billion euros in back taxes in Ireland, a move Washington warned could damage transatlantic economic ties.

Apple confident ahead of European Union tax judgement

November 11, 2015

Apple chief executive Tim Cook said he was feeling "pretty good" ahead of the European Union's judgement on its Irish tax arrangements, as the company announced 1,000 new jobs in Ireland on Wednesday.

EU broadens corporate tax crackdown to Amazon (Update)

October 7, 2014

The European Union is broadening its crackdown on multinationals' tax avoidance schemes, opening Tuesday an investigation into Amazon's practices on suspicion the online retailer is not paying its dues on profits made across ...

Recommended for you

Enhancing solar power with diatoms

October 20, 2017

Diatoms, a kind of algae that reproduces prodigiously, have been called "the jewels of the sea" for their ability to manipulate light. Now, researchers hope to harness that property to boost solar technology.

Dutch open 'world's first 3D-printed bridge'

October 17, 2017

Dutch officials toasted on Tuesday the opening of what is being called the world's first 3D-printed concrete bridge, which is primarily meant to be used by cyclists.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.