Amazon Hit With 250M Euro Tax Bill

Chris Gaetano
Published Date:
Oct 4, 2017

The European Union said that gigantic Internet retailer Amazon owes 250 million euros, approximately $293 million, because it benefited from a tax agreement with Luxembourg that was later found to be illegal, according to CNN Money. The decision comes three years after a former PwC staffer leaked details about numerous tax avoidance schemes undertaken through the government of Luxembourg. The document pointed to more than 300 different companies, including Amazon, that are said to have received special tax rulings from the government that enabled them to transfer revenues to Luxembourg, which has a significantly lower corporate tax rate than other European countries.

In Amazon's case, the EU says that Luxembourg allowed Amazon to set up a shell company with no employees, offices or business activities in the country. The ostensible reason for this company's existence was to act as a holding company for the retailer's intellectual property rights. Reuters noted that such companies can be used to shift profits from one country to another by selling things like brands or patents from the parent company to a subsidiary located in a country with a different tax regime, such as Luxembourg. While such allowances are technically legal under EU law, countries are not allowed to give preferential treatment to specific companies. The EU said that Amazon received a deal that other companies would not ordinarily receive without special intervention, and therefore any tax savings on the part of the retailer were illegal, according to CNN. 

Amazon denied it received any special treatment and said in a statement it might appeal the ruling, said CNN. 

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