E-commerce giant Amazon.com (AMZN - Free Report) is the latest technology corporation to face the regulatory wrath of the European Union.
After a three-year investigation, the European Commission has ordered Amazon to pay $300 million, or about €250 million, in back taxes to Luxembourg, saying that the company’s regional headquarters in the country allowed Amazon to avoid paying taxes on much of its European profits between 2006 and 2014.
The Commission said that Amazon was benefitting from a tax arrangement with Luxembourg, considered a tax haven, that was illegal. Amazon’s holding company in the country, which is a limited partnership without offices, employees, or any business activity, was not subject to corporate taxes under Luxembourg’s tax laws.
“Luxembourg gave illegal tax benefits to Amazon,” said Margrethe Vestager, commissioner for the EU, in a statement. “As a result, almost three quarters of Amazon’s profits were not taxed…Member States cannot give selective tax benefits to multinational groups that are not available to others,” she continued.
Amazon initially entered into the tax arrangement with Luxembourg back in 2003, but it isn’t the only company that has done so. Thousands of other companies have based themselves in the small European country, notes Forbes. McDonald’s (MCD - Free Report) and French utility company Engie are also being investigated for their Luxembourg tax strategies.
Amazon’s tax struggles have managed to travel stateside as well. According to Forbes, the company was accused of transferring U.S. funds to its Luxembourg-based shell company in order to bypass paying $234 million in taxes for 2005 and 2006. While Amazon won the case against the IRS regarding this accusation, the IRS is reportedly appealing.
Meanwhile, the European Commission said it would take Ireland to court on Wednesday for failing to collect the $14.5 billion, or about €13 billion, in back taxes from iPhone maker Apple Inc. (AAPL - Free Report) by the deadline, which was this past January. Regulators found that Apple was paying a tax rate of just 0.005% compared to Ireland’s usual corporate rate of 12.5%.
And earlier this summer, EU regulators slapped Google (GOOGL - Free Report) with a record $2.7 billion antitrust fine, ruling that the search engine denied “consumers a genuine choice” by utilizing its popular search engine to unfairly guide them to its shopping platform. In other words, Google had been giving illegal priority placement to its own shopping service in search results, while pushing rivals’ search results to areas where buyers were much less likely to click.
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