EU goes after Apple, Amazon tax money
Tech giants ordered to repay millions, Ireland given to court
7 October, 2017
The EU launched last Wednesday a fresh crackdown against tech giants Amazon and Apple over tax avoidance, news wires reported. While Amazon has been ordered to repay €250m in back taxes after the Commission said it had been given an unfair tax deal in Luxembourg, Ireland was to be taken to court over its failure to collect €13bn of back taxes from Apple.
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon's profits were not taxed. In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules. This is illegal under EU State aid rules,” Competition Policy Commissioner Margrethe Vestager said. “Ireland has to recover up to €13bn in illegal state aid from Apple. More than one year after the Commission adopted this decision, Ireland has still not recovered the money. That is why we have decided to refer Ireland to the EU Court,” she added.
The Commission said a tax deal with Luxembourg had enabled Amazon to shift the “vast majority” of its profits from Amazon EU to Amazon Europe Holding Technologies, which was not subject to tax. But Amazon denied it owed any back tax, saying it did “not receive any special treatment from Luxembourg.” “We paid tax in full accordance with both Luxembourg and international tax law,” the online shopping giant said in a statement. The tax deal between Luxembourg and Amazon was struck in 2003. The Wednesday's decision follows a three-year long investigation by the Commission, which said in 2014 that it had suspicions the arrangement had broken EU rules.
Separately, the Commission was taking Ireland to court in a move labelled as “regrettable” by Dublin. “It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large scale recovery amount,” the Ireland's finance ministry said in a statement. It had never accepted the Commission's analysis in the Apple state aid decision, but was committed to collecting the money due, pending Dublin's own appeal of the ruling. Ireland had been in constant contact with the Commission and Apple for more than a year and was close to setting up an escrow account, which would include the hiring of at least one investment manager to handle the fund.