A tax deal Amazon struck with Luxembourg in 2003 may constitute state aid, according to preliminary findings in a European Commission inquiry, looking into whether a number of multinational companies were given tax breaks and broke EU competition rules. In response to the claim, Amazon argues that it was given “no special tax treatment from Luxembourg,” adding that “we are subject to the same tax laws as other companies operating here.”
Meanwhile, the Luxembourg Finance Ministry issued a statement, calling the state-aid allegations “without merit” and “no competitive advantage was granted.” However, the EC, which began its investigation last year, said it has no proof that the Amazon tax arrangement was “compatible with the internal market.”
The commission is looking into whether Luxembourg sufficiently investigated how the US online giant planned to transfer money between its subsidiaries. The EC is also questioning whether the tax agreement was in line with 2003 market conditions and investigating how royalty payments between certain Amazon subsidiaries were calculated. “If the royalty is exaggerated, it would unduly reduce the tax paid by Amazon in Luxembourg by shifting profits to an untaxed entity from the perspective of corporate taxation,” the EC said.
