Jeff Bezos

The European Union is investigating Luxembourg’s tax scheme for Amazon’s subsidiary in the country, the EU executive said Tuesday, addressing concerns that the online retailer may not be paying its full share of taxes.

Jeff BezosThe internet giant is the latest in a series of high-profile companies targeted over tax payments in Europe, following probes into undue benefits for Apple, Starbucks and the financing arm of Italian carmaker Fiat under schemes in Ireland, Italy and the Netherlands.

“National authorities must not allow selected companies to understate their taxable profits by using favourable calculation methods,” said EU Competition Commissioner Joaquin Almunia.

“It is only fair that subsidiaries of multinational companies pay their share of taxes and do not receive preferential treatment which could amount to hidden subsidies,” he added.

But Luxembourg dismissed the concerns of the European Commission, and said it would “fully cooperate” with the investigation.

“Luxembourg is confident that … the commission investigation will conclude that no special tax treatment or advantage has been awarded to Amazon,” it said in a statement.

Taxation is usually a national issue in the EU, but the EU’s executive believes it has the right to intervene in this case because the tax arrangement for Amazon could constitute state aid.

The investigation relates to Amazon’s subsidy in Luxembourg, Amazon EU Sarl.

Due to the Grand Duchy’s tax scheme, “most European profits of Amazon are recorded in Luxembourg but are not taxed in Luxembourg,” the commission wrote.

The EU’s executive said Luxembourg had not fully complied with an earlier request for information about the tax scheme.



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