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THE EUROPEAN COMMISSION (EC) has launched an investigation into Luxembourg over a tax deal it struck with Amazon.
The EC believes that Luxembourg gave Amazon favourable terms in a 2003 deal, which is still in force, giving them an “economic advantage” by allowing them to pay less tax than other companies.
Yesterday the Financial Times reported that this deal helped limit the company’s overall bill to less than 1% of the retailer’s European income.
The central allegation is that Luxembourg allowed Amazon to misallocate profits within its corporate structure, in a way that fell short of standards expected of an arms-length transaction (i.e. they’re both independent and have no relationship between each other) between corporate subsidiaries.
In short, it allowed Amazon to artificially reduce its tax bill on a selective basis.
If these charges are proven, the commission can ask Luxembourg to recoup the substantial state subsidy from the firm.
The EC say that Luxembourg did not fully comply with its request for information as part of the investigation, instead only providing a limited sample.
In a statement, the EC commissioner for Taxation, Allgirdas Šemeta said that ensuring fair tax competition was essential for the EU common economic prosperity.
As we work together to restore growth and competitiveness, it is essential to tackle the harmful tax practices which erode the tax bases of EU Member States. Fair play in taxation must be the rule.
The EC is clamping down on a number of EU countries including Ireland, which denied that Apple received “selective treatment” on taxes paid in the country over two decades.
First published 11.05am
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Luxembourg have made a tax deal to boost employment, I say fair play to them!
It’s just not really fair on other smaller companies that can’t make deals with Luxembourg.
Eh… What jobs did Amazon put in Luxembourg? Pretty sure they employ more people at their call centre in Cork than in Luxembourg.
And they CERTAINLY employ far more in their distribution centres, none of which are there.
Deals like this only secure a small corporation tax for Luxembourg, but were it not for their low tax, they’d be getting nothing at all.
Countries are very literally in a race to the bottom, bending over backwards to these companies, which equates to billions in lost taxes every year. The only way to reverse the trend is a united front against it. If they base within the EU they should pay their fair share of taxes. If they then start to move outside to places with more “permissive” regimes, impose investment restrictions on companies based there until they get them in line.
It’s one thing to want to attract investment. But to do so by using how little they have to contribute back to society as a selling point is just wrong.
tax deals don’t boost employment because they have to be offset elsewhere by other taxes.
Its the big boys not happy, France, Germany, UK and US. Lots of tax deals done in the city of London over the years. If you have a problem with another countries tax affairs then you should compete. It’s the only way smaller countries can win. Competition is good for everyone. Greed is ugly
They didn’t seem to have a problem when Apple were almost bust or when Amazon was nearly wiped out during the .com bust. They were happy to let small countries take on what they saw as basket case companys. Now these companys are worth hundreds of billions they want a cut having taken none of the risks such as lowering taxes to attract them in the first place.
EU rules prohibit state aid.
The EC are clutching at straws to satisfy a few jealous leaders in certain parts of the EU.
to be fair, why should corporations avoid paying a contribution of taxes?
The job of big government fear and chasing companies around the world to shake them down.
so you’d rather the middle class be targeted?
Sketch lads !
To hell with all these sweetheart deals that multinationals scam out of Ireland and other countries. They’re of no benefit to wider public, only the companies themselves… and the politicians who negotiate them.
They should look into that so-called “Radio Luxembourg” that was on in the eighties while they’re at it.
have your say