Regulator also plans to take Ireland to court over £11bn back taxes of Apple
In its latest crackdown on Silicon Valley tech firms, the European Commission has ordered Amazon to pay £221m in benefits to Luxembourg and has referred Ireland to the European Court of Justice for its failure to recover £11bn in back taxes levied against tech giant Apple last year.
Amazon’s European operations are headquartered in Luxembourg and has been under investigation after it was alleged that Luxembourg had breached its rules on state aid by allowing Amazon’s tax-minimising setup since 2003.
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed,” said Margrethe Vestager, European competition commissioner today.
According to BBC, the tax deal between Luxembourg and Amazon was struck in 2003. At that time, European Commission’s president Jean-Claude Juncker was also the prime minister of Luxembourg.
According to EU trade norms, member states cannot give selective tax benefits to multinational groups that are not available to others. Based on this, the Commission had ordered Apple last year to pay the unpaid taxes as it ruled the firm had received illegal state aid.
“More than one year after the Commission adopted this decision, Ireland has still not recovered the money,” Vestager said, adding that Dublin had not even sought a portion of the sum.
Calling this move “extremely disappointing”, Ireland’s Finance Ministry has said that while it has never accepted the ruling, it has nonetheless “committed significant resources … to ensuring that recovery of the alleged Apple state aid takes place without delay.”
According to a report in Bloomberg, regulators can reportedly deliver a similar order against McDonald’s in the coming weeks.