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23rd Nov 2017

EU commission scrutinises Luxembourg's tax deal with Amazon

  • Amazon paid under one percent tax on its revenues via Luxembourg (Photo: Nic Taylor)

The EU commission on Friday (16 January) published details of its ongoing anti-trust case into Luxembourg's tax deal with the global retailer Amazon, a deal secured while commission chief Jean-Claude Juncker was Luxembourg PM.

The 23-page document details the reasons why the EU commission thinks the tax deal may amount to illegal state aid as well as the complex company structure allowing it to put most profits into a non-taxable entity.

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It also contains a request for Luxembourg authorities to provide more information.

The commission says the Luxembourg tax authorities accepted a "cosmetic arrangement" that was "unnecessarily complex" and that was approved in a very short period of time (11 days). It was never revised in the 12 years it has been in force.

The tax deal allowed the European branch of Amazon - which had a net revenue of €13.6 billion in 2013 - to pay as little as €60 million in taxes per year.

"This is just a step in an ongoing investigation, after publication in the Official Journal, the interested parties will have one month to comment," EU commission spokesman Ricardo Carodso said in a press conference on Friday.

He said the commission aims to finish this and other three taxation cases by the end of the year.

The Amazon deal dates back to 2003 and is still in force today.

Juncker openly admitted having done everything he could as prime minister to attract investors like Amazon in order to shift his country's economy from a moribund steel industry to financial services.

In a TV show with the Austrian public broadcaster ORF in December, Juncker said he did speak to Amazon "but we didn't talk about the precise tax questions, because it is not something for the government, it is for the tax administration."

Asked by EUobserver what exactly he discussed with Amazon, Juncker said: "We spoke about infrastructure, pipelines, what kind of qualified staff we can provide, how we can train them."

The LuxLeaks affair put Juncker in the spotlight and eurosceptic MEPs in December triggered a confidence vote, which he survived.

But the issue has not gone away.

Earlier this week, the Greens in the European Parliament managed to get cross-party support for an inquiry committee into tax deals in all member states.

Members of Juncker's own political family have endorsed the probe, saying it is not about Juncker, but tax justice in general. Still, Juncker's role as architect of his country's tax policy will continue to be questioned.

A spokesman for Juncker said the commission president will "fully cooperate" with the parliamentary inquiry.

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Fast-food giant McDonald’s has avoided paying €1 billion in tax across the EU, and should be included in the EU’s probe on ‘sweet-heart’ tax deals, according to a report by trade unions and NGOs published Wednesday.

EU proposes new tax transparency rules

Peer pressure will underpin a new European Commission proposal to make big companies pay their fair share of tax and prevent governments from cheating others out of taxable revenue streams.

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