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Amazon’s Luxembourg tax deal moves back into the EU spotlight

January 15, 2015 01:40 PM
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(Bloomberg) -- Amazon.com Inc.’s tax affairs will be back in the limelight tomorrow as the European Union publishes details of its probe into a sweetheart deal with Luxembourg.

The European Commission will release a non-confidential version of a letter outlining suspicions that the online retailer unfairly shifted profits to lower its taxes, the regulator said today in an e-mailed statement. The letter was sent to Luxembourg officials as the EU opened a formal probe into the Amazon tax accord on Oct. 7.

Most European profits of Amazon are recorded in Luxembourg but are not taxed there as a result of a 2003 tax ruling, which is still in force today and applies to a subsidiary in the country, the EU said at the time.

Amazon is the No. 1 online retailer in Europe as well as North America, according to the Internet Retailer Top 500 Europe and Top 500 Guide, which ranks retailers in North America by their online sales.

The commission’s probe of tax deals expanded last month as the competition regulator asked all EU countries to give it information about financial agreements with multinational corporations. Until then, the EU had focused on specific companies with probes into Irish tax deals with Apple Inc., Luxembourg’s taxation of Fiat Finance & Trade and Amazon, as well as the Netherlands’ treatment of Starbucks Corp.

Drew Herdener, a spokesman for Amazon, declined to immediately comment. The press office of the Luxembourg finance ministry didn’t immediately answer requests for comment.

The commission is in charge of policing state subsidies that skew competition and can request countries to claw back illegal aid. The fiscal probes began under the previous commission president, Jose Barroso, who left office at the end of October.

Juncker Involvement

Tax issues have cast a shadow over the first few weeks of Jean-Claude Juncker’s tenure as the new commission chief. A group of investigative journalists disclosed in early November that Luxembourg helped hundreds of companies shave tax bills. Juncker, who was Luxembourg’s prime minister for almost 19 years until late 2013, said in November that he had no involvement in the deals.

In 2005, when Juncker held the prime minister and finance minister posts simultaneously, he told the Luxembourg Parliament that his government planned to make the country the main address for e-technology, citing names such as Amazon as already being flagships “for the policy that is being driven by the finance minister and by others.”

“Promising contacts” with Amazon and “other international players” happened partly because of “a favorable tax environment that we have created here in Luxembourg,” Juncker said at the time.

A push for a formal investigation of sweetheart tax deals has gained momentum in the European Parliament in the wake of the so-called LuxLeaks revelations.

Leaders of the assembly’s political groups may decide on Feb. 5 whether to bring to a vote in the full Parliament a request by the Green Party to establish a committee of inquiry to look into tax arrangements by EU nations with multinational companies. If approved, the committee would have the power to subpoena documents.

 

 

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