Amazon Ordered by EU to Pay $300M Over ‘Illegal Tax Advantage’

Amazon.com has been ordered to pay 250 million euros ($294 million) to Luxembourg after the European Commission (EC) found that the online retailer received illegal tax benefits. The EC says Amazon received tax advantages between 2006 and 2014 in the country without any "valid justification." Margrethe Vestager, the EU's commissioner for competition, said in a statement, "Luxembourg gave illegal tax benefits to Amazon. As a result, almost three-quarters of Amazon's profits weren't taxed. 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. Member states cannot give selective tax benefits to multinational groups that are not available to others.”

Amazon said in response to the commission's decision that it believes it didn't receive any special treatment from Luxembourg and that it paid tax in full accordance with both Luxembourg and international tax law. The retailer is considering an appeal of the Commission's decision.

Total Retail’s Take: Amazon may actually win this one. In 2004, Amazon restructured its operations to create Amazon EU S.a.r.l., which is its European operating headquarters. Amazon EU S.a.r. l pays a royalty to the parent company in Europe for use of intellectual property, and that parent company is a limited liability partnership, which isn't subject to corporate tax in Luxembourg. The EU isn't winning any friends with U.S tech companies. It has promised to scrutinize tax arrangements between large multinational companies and the bloc's member states. Last year, the EU ordered Ireland to recover 13 billion euros in taxes from Apple. After the commission's decision, Apple CEO Tim Cook denounced it as "total political crap."