European Commission orders Luxembourg to claim back 250 million in taxes from Amazon – TJN Reaction

There are two very welcome pieces of tax justice news today. Firstly, the European Commission has ordered the tax haven of Luxembourg to recover 250 million euros in taxes from Amazon, finding that the benefits extended to the company amount to illegal state aid. The support Amazon received, allowed it a competitive advantage over domestically located retailers.

In her announcement European Commissioner for Competition, Margarethe Vestager said of the decision,

“companies must be able to compete on equal terms and not at the expense of European taxpayers.”

Commenting on the announcement, The Tax Justice Network’s Markus Meinzer said the following:

This decision is good news for all those who support European democracies and fair market competition – and for all small and medium business owners. The way Amazon competes many of them out of the market has today been ruled not to be in line with the EU single market. In contrast, and astonishingly, the tax and transfer pricing regulations crafted by the OECD are often seen as condoning these kinds of market distortions. This underscores the extent to which the OECD’s tax rules are broken and the urgent need for reform. Now is the time for the EU to prepare the transition to unitary taxation of multinational companies with a more ambitious proposal on a common corporate tax base including global profits.”

We should also point out that although these illegal state aid investigations began before the LuxLeaks scandal, (in which brave whistleblowers in Luxembourg alerted the world to the deals being struck behind closed doors that were so plainly against the public interest), the fall-out from that meant that the Commission’s investigations were substantially expanded. So, once again, thank you Antoine Deltour and Raphaël Halet.

Important developments are in the pipeline for far stronger protections for whistleblowers across the EU. The European Parliament’s Legal Affairs Committee is calling on the Commission to propose legislation to protect whistleblowers across Europe no matter how they came across the information or which channel of reporting they use to sound the alarm. Details here.

The second piece of good news today is that in addition to today’s Amazon ruling, the European Commission has also referred Ireland to the European Court of Justice for failing to recover illegal tax benefits it granted to Apple, worth up to 13 billion euros. Commissioner Margrethe Vestager said today,

“Ireland has to recover up to 13 billion euros in illegal State aid from Apple. However, more than one year after the Commission adopted this decision, Ireland has still not recovered the money, also not in part. We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But Member States need to make sufficient progress to restore competition. That is why we have today decided to refer Ireland to the EU Court for failing to implement our decision.”