Commission also says it plans to take Irish government to European court of justice over failure to collect 13 bn from Apple
Amazon has been was necessary to repay EUR2 50 m( PS222m) in illegal country aid to Luxembourg, as EU authorities continue their campaign against sweetheart deals that help the biggest firms slash their taxation bills.
The European committee also announced on Wednesday that it planned to take the the Irish government to the European court of justice( ECJ) over its failure to collect EUR1 3bn in unpaid taxes from Apple, in relation to an earlier ruling.
Margrethe Vestager, the EU commissioner in charge of competition, said Luxembourg’s” illegal taxation advantages to Amazon” had allowed almost three-quarters of the company’s gains to run untaxed, enabling it to pay four times less taxation than local rivals.
” This is about rivalry in Europe , no matter your flag , no matter your ownership ,” Vestager said, dismissing suggestions she was targeting non-European companies.” Paying taxes is part of doing business in Europe .”
The commission said Amazon had benefited from an illegal taxation deal granted by the Luxembourg authorities that allowed the company to artificially reduce its taxation bill by EUR2 50 m from 2006 to 2014. The company has been was necessary to repay the full amount plus interest.
Amazon rejected the findings of the commission investigation.” We believe that Amazon did not receive any special treatment from Luxembourg and that we paid tax into full conformity with both Luxembourg and international taxation statute. We will study the commission’s ruling and hold our legal options, including an appeal .”
The country’s government said:” As Amazon has been taxed in accordance with the tax rules applicable at the relevant hour, Luxembourg considers that the company has not been granted incompatible state aid .”
In a separate announcement, Vestager said she was appealing to Europe’s highest court to enforce an earlier ruling against Apple to ensure the iPhone manufacturer repaid EUR1 3bn in back taxes.
Apple, which has appealed to Europe’s highest court to contest the decision, has neither repaid the money to the Irish government nor placed the money in an escrow account, a standard practice when court proceedings are under way.
Dublin said it disputed the commission’s ruling that it attained the incorrect decision in the Apple tax deal, but has promised to collect fund owed as soon as possible. Citing its” intensive work” on recovering the funds, the Irish government described the decision as “extremely regrettable” in a statement.
” Irish public officials and experts have been engaged in intensive work to ensure that the nation complies with all its recovery obligations as soon as is practicable, and have been in constant linked with the European commission and Apple on all aspects of this process for over a year ,” it said.
EU member states risk multimillion-euro fines when they fail to act on EU competition rulings. In 2015 the commission requested a EUR2 0m fine plus daily penalty pays against Italy over the country’s refusal to collect back taxes from Sardinian hotels that had benefited from special deals.
The commission acknowledged that Ireland had begun to work on the recovery of the back taxes, but deems the Irish deadline of” March 2018 at a very early” not good enough.
The case against Amazon centred on two subsidiaries incorporated in Luxembourg and controlled by the US parent- Amazon EU group and Amazon Europe Holding Technologies. The latter was described by the commission as” an empty shell” that had no employees or offices, but was used to bring down the company’s taxation bill.
Amazon EU group, which operates the internet company’s operations in the region, transferred 90% of its operating earnings to the holding company, where they were not taxed. As a outcome, Amazon paid an effective tax rates in Luxembourg of 7.25%, compared with the national rate of 29%.
Amazon’s blueprint was Project Goldcrest, a taxation strategy named after Luxembourg’s national bird, based on a 2003 enter into negotiations with authorities in the Grand Duchy. Amazon changed its tax operations in June 2014, a year after Brussels began investigating tax rulings across the EU.
US authorities have also been investigating Project Goldcrest, but lost in court to the retail firm. In March a court ruled against the Internal Revenue Service, which had argued Amazon owed the US $1.5 bn( PS1. 13 bn) in unpaid taxes linked to its Luxembourg companies.
Luxembourg’s role in orchestrating taxation avoidance bargains for hundreds of global companies was revealed by the Guardian in 2014, creating the issue of tax policy in one of the EU’s oldest member states.
The case continues to hang over Jean-Claude Juncker, the European commission chairperson, who served as Luxembourg’s prime minister from 1995 to 2013, and acted as finance minister for much of that period.
The commission launched the Amazon investigation in October 2014, only weeks before Juncker took office, while the fallout over the Luxleaks revelations clouded his early weeks.
Many European political leaders and business groups argue generous tax breaks dedicate Amazon an unfair competitive advantage over smaller rivals, inspiring the recent announcement of a plan to rewrite EU tax rules. But investigations conducted by unjust country assistance run broader, with the EU authorities expected to conclude an inquiry into the fast-food chain McDonald’s in the coming weeks.
The commission has also ruled unlawful tax bargains between Starbucks and the Dutch authorities, as well as Fiat’s arrangements with Luxembourg. The Apple case has generated the biggest furore, with the chief executive, Tim Cook, rejecting the claims as” total political crap “.
The commission said the sweetie deal with the Irish government allowed Apple to pay a maximum tax rate of 1 %, which fell to simply 0.005% in 2014.The usual rate of corporation tax in Ireland is 12.5%.
If the UK leaves the EU single market, it will not be bound by European the standard rules on fair taxation competition. However, any free-trade deal with the EU is likely to constrain the government’s ability to turn the UK into a low-tax haven. Vestager said she was not expecting British government’s to seek this course:” I don’t see why[ UK policy] would change .”
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