Tax wars: Europe lands blow against Amazon

From Bloomberg:

“The European Union said Luxembourg hastily approved a “cosmetic” tax deal with Amazon.com Inc. in 11 days, allowing the company to shift profits to a tax-free unit.

The EU told Luxembourg officials in a letter that the deal, based on a “cosmetic arrangement,” gives the Internet retailer an unfair advantage over competitors and doesn’t comply with global standards.”

Other cases are live against Fiat, Starbucks and Apple. From European MEP Sven Giegold, via email:

EU regards Amazon-Deal as illegal state aid: breakthrough against tax dumping in Europe

Today, the Directorate General for Competition of the European Commission has published a first analysis of Amazon´s tax deals in Luxembourg. The Commission has started an investigation to determine whether these practices have led to illegal state aid for the company.

If this assessment is confirmed, the Commission could claw back such unjustified subsidies. Greens/EFA economic and finance spokesperson Sven Giegold stated:

“This is a breakthrough in the fight against tax dumping in Europe. The tailor made tax deals of members states with transnational corporations are put in the line of fire. The inquiry committee into tax avoidance and dumping must now be swiftly put in place and may not be delayed through legal tricks. The investigation of these tax deals can lead to additional revenues due to claw backs and thus would provide a welcome boost to stretched exchequers in Europe – thousands of tailor-made tax deals have been concluded, especially in Ireland, Luxembourg and the Netherlands.

Nevertheless, European state aid law cannot replace a European tax policy. State aid law can only tackle tax dumping, if transnational corporations benefit from preferential treatment in comparison to local companies. As soon as all companies benefit from low tax rates, European law has no teeth. Therefore, EU-wide tax dumping must be stopped and European minimum tax rates are urgently needed.

Already in her parliamentary Margrethe Vestager stood out as a straight-lined defender of fair competition. It is high time that she takes rigorous steps without regard of President of the Commission Juncker and some member states. It is still a scandal that only 9 civil servants of the Commission are in charge of investigating the tax deals of big corporations in Europe. In a broader sense 20 civil servants are involved in this work. The human resources of this unit must be increased urgently and drastically. This in turn also would pay off for all honest taxpayers.”

Please find the assessment of the Amazon case in Luxembourg, which the European Commission published today, here: