Following a three-year state aid investigation, the Commission has concluded that Amazon received illegal tax benefits worth around €250m from a Luxembourg tax ruling. Luxembourg must now recover this amount, plus interest, from the company. The precise amount will have to be calculated on the basis of the methodology established in the Commission’s decision.
The ruling issued by the Luxembourg tax authorities applied between 2003 and 2011 to Amazon’s subsidiary, Amazon EU, based in Luxembourg, which records most of Amazon’s European profits. The subsidiary paid a tax deductible royalty to Amazon Europe Holding Technologies, a limited liability partnership established in Luxembourg, but not subject to corporate taxation in that country.
Frank Haskew, head of ICAEW tax faculty, said the EU’s announcement was ‘the latest round in its state aid investigations into the likes of Amazon, Google and the role of Luxembourg and Ireland in offering “deals” to such companies. There remains much public concern over the tax arrangements of multinational companies and the cases highlight the difficulty in adapting existing corporate tax rules to internet based businesses’. Referring to current work at the OECD on these issues and measures being pursued in the UK, EU and US, Haskew added: ‘it is important that future work is directed to achieving a realistic international consensus’.
EU competition commissioner, Margrethe Vestager, has also announced that the Commission is to refer Ireland to the CJEU for failing to recover illegal state aid of around to €13bn from Apple, which was the subject of a decision in August 2016. The deadline for Ireland to implement the decision was 3 January 2017. Ireland applied to the CJEU in December to have the decision annulled and is in the process of setting up an escrow account for the fund, should the court uphold the Commission’s decision.
Following a three-year state aid investigation, the Commission has concluded that Amazon received illegal tax benefits worth around €250m from a Luxembourg tax ruling. Luxembourg must now recover this amount, plus interest, from the company. The precise amount will have to be calculated on the basis of the methodology established in the Commission’s decision.
The ruling issued by the Luxembourg tax authorities applied between 2003 and 2011 to Amazon’s subsidiary, Amazon EU, based in Luxembourg, which records most of Amazon’s European profits. The subsidiary paid a tax deductible royalty to Amazon Europe Holding Technologies, a limited liability partnership established in Luxembourg, but not subject to corporate taxation in that country.
Frank Haskew, head of ICAEW tax faculty, said the EU’s announcement was ‘the latest round in its state aid investigations into the likes of Amazon, Google and the role of Luxembourg and Ireland in offering “deals” to such companies. There remains much public concern over the tax arrangements of multinational companies and the cases highlight the difficulty in adapting existing corporate tax rules to internet based businesses’. Referring to current work at the OECD on these issues and measures being pursued in the UK, EU and US, Haskew added: ‘it is important that future work is directed to achieving a realistic international consensus’.
EU competition commissioner, Margrethe Vestager, has also announced that the Commission is to refer Ireland to the CJEU for failing to recover illegal state aid of around to €13bn from Apple, which was the subject of a decision in August 2016. The deadline for Ireland to implement the decision was 3 January 2017. Ireland applied to the CJEU in December to have the decision annulled and is in the process of setting up an escrow account for the fund, should the court uphold the Commission’s decision.
