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Amazon owes $293 million to European Union

The European competition commissioner Margrethe Vestager  of the European Union has ordered Amazon, in a ruling, to pay €250 million ($293 million) after finding that it benefited from an illegal tax arrangement with Luxembourg.

Apple was slapped by a huge tax bill in 2016, when the EU ordered Ireland to recover up to €13 billion ($15 billion) from the tech company and this case too echoes the tech company’s situation. After an in-depth, three-year-long aid investigation from the Commission it was concluded that Luxembourg gave illegal tax benefits to Amazon of around that sum. Because Luxembourg had given illegal tax benefits to Amazon it has resulted in, almost three quarters of Amazon’s profits [in Europe] not being taxed.

The Commission ruled that Luxembourg unfairly helped Amazon for over eight years by allowing the company to essentially split into two. One part of Amazon was making money by selling stuff online, the other was a holding company collecting royalties on its brand.

“Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules,” Vestager said.

In the period investigated, Amazon was shifting its profits from a company that was subject to tax in Luxembourg to another one that wasn’t subject to tax, known as the “holding company.” The latter had no employees, no offices and no business activities.

The ruling puts Commission President Jean-Claude Juncker in an awkward position. He simultaneously held the positions of prime minister and finance chief in Luxembourg when the tax arrangement with Amazon was agreed.

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