Amazon tax arrangements could be illegal says EC

The European Commission (EC) has said in a preliminary report that Amazon’s tax affairs could be considered illegal because they constitute “state aid” for the firm by the Luxembourg government.

The EC says in a report that “the Commission’s preliminary view is that the tax ruling of 5 November 2003 by Luxembourg in favour of Amazon constitutes State aid.” So that means that the EC thinks that Amazon has received preferential treatment from Luxembourg with regards to its tax affairs specifically related to VAT.

Gluttons for punishment might like to digest the official report here.

Obviously Amazon rejects these claims and says it is simply enjoying the rights of any other company based in Luxembourg and the Luxembourgish government agrees.

The finance ministry of Luxembourg says: “Luxembourg is confident that the state aid allegations in this case are without merit and will be able to convince the Commission of the legitimacy of the anticipatory decision in question and that no competitive advantage was granted.”

So who knows what will happen? The BBC reports the story here. But the Daily Mail manages to be more sensationalist (imagine) with its report here with claims that if the EC finds against Amazon, then it could have to pay billions in tax.

To whom, we wonder?

It’s difficult to see that happening but we could be seeing the start of the unraveling of the Luxembourg off-shoring model within the EU. And that would be no bad thing. (That’s a record for using the word Luxembourg in an article. Well done. – Ed.)