Luxembourg provided Amazon with illegal tax benefits amounting to approximately €250 million ($294.25 million), the European Commission said on Wednesday as part of a statement meant to detail a conclusion of its investigation of Amazon's tax avoidance practices on the Old Continent. The illegal benefits applied to Amazon in a period between 2006 and 2014, the competition watchdog of the European Union found, with its chief Commissioner Margrethe Vestager explaining that Luxembourg isn't able to provide selective tax benefits to any legal person. As a result of the benefits that were deemed to be against EU State aid rules, Luxembourg was ordered to collect back taxes owed by Amazon after helping the company avoid paying taxes on almost three quarters of its profits in the aforementioned period, Vestager said.
The latest turn of events marks an apparent conclusion of a high-profile probe launched three years ago after the European Commission wanted to investigate whether Luxembourg had any basis to lower Amazon's tax rate that some actors in the political bloc believe is already too lenient and allows the company to avoid paying its fair share of taxes compared to traditional, not as digitally inclined firms. Luxembourg's exemption given to Amazon allowed the company to save a significant sum on the majority of its European sales seeing how it's already been channeling their profits through EU state members with low tax rates, the Commission concluded, adding that both Amazon EU and Amazon Europe Holding Technologies were the beneficiaries of the illegal decision. The former is a parent of the latter, both are based in Luxembourg, and AEHT has no employees or premises, instead existing for the sole purpose of licensing intellectual property to its U.S. parent, the officials said, noting how Amazon reorganized the manner in which it operates in June 2014 and that its existing setup wasn't part of the recently concluded investigation.
The Commission insists the $294 million sum isn't a fine and that its related interest won't be particularly high, with the Luxembourg administration already revealing it disagrees with the decision, saying that its tax system evolved in a significant manner over the investigated period but that Amazon has been taxed accordingly for its entirety. The Seattle, Washington-based tech giant has yet to issue a comment on the matter in any capacity.
Update: Amazon reached out with the following statement:
"We believe that Amazon did not receive any special treatment from Luxembourg and that we paid tax in full accordance with both Luxembourg and international tax law. We will study the Commission's ruling and consider our legal options, including an appeal. Our 50,000 employees across Europe remain heads-down focused on serving our customers and the hundreds of thousands of small businesses who work with us."