France24 –AFP, by Alex PIGMAN
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| AFP/File / by Alex PIGMAN | Europe's competition chief Margrethe Vestager accused tiny Luxembourg of an illegal deal with internet shopping giant Amazon to pay less tax than other businesses |
BRUSSELS
(AFP) - The EU turned the screw on US tech giants Wednesday, ordering Amazon to
repay Luxembourg 250 million euros in back taxes and referring Ireland to the
top EU court for failing to collect billions from Apple.
Europe's
competition chief Margrethe Vestager accused tiny Luxembourg of an illegal deal
with internet shopping giant Amazon to pay less tax than other businesses.
The two
cases are part of a wider offensive by the EU on Silicon Valley behemoths as
Europe seeks ways to regulate them more tightly on issues ranging from privacy
to taxation.
De expositie "Women House" door 40 vrouwelijke
kunstenaars in de Monnaie de Paris, uitgebeeld door kunstenares KASHINK
"Luxembourg
gave illegal tax benefits to Amazon. As a result, almost three quarters of
Amazon's profits were not taxed," Vestager said in a statement.
The tax
demand comes a year after the hard-charging Vestager ordered tech icon Apple to
repay 13 billion euros ($14.5 billion) in back-taxes to Ireland in a decision
that shocked the world.
In a sign
that it was not letting up, the EU on Wednesday referred Ireland to the EU's
highest court for failing to collect the bill.
"The
European Commission has decided to refer Ireland to the European Court of
Justice for failing to recover from Apple illegal state aid," the EU's
anti-trust regulator said in a statement.
For its
part, Amazon rejected the charges and said it would "study the
commission's ruling and consider our legal options".
"We
believe that Amazon did not receive any special treatment from Luxembourg and
that we paid tax in full accordance with both Luxembourg and international tax
law," it said in a statement.
Silicon
Valley targeted
Vestager's
announcement comes days after the EU said at a special digital summit that it
was drawing up a special tax targeting Google and Facebook, a policy championed
by French President Emmanuel Macron.
Launched
three years ago, the European Commission's probe into Amazon's deals with
Luxembourg was part of several investigations into sweetheart tax arrangements
between major companies and several EU countries.
The
commission -- the EU's powerful executive arm responsible for policing its
competition rules -- opened the probe in 2014 in the belief that Luxembourg's
tax favours to Amazon constituted "state aid" that distorts
competition.
Many came
in the wake of the "Luxleaks" scandal which revealed details of tax
breaks given by the tiny but wealthy duchy of Luxembourg to dozens of major US
firms.
The
revelations came as a particular embarrassment for European Commission
President Jean-Claude Juncker, who was prime minister of Luxembourg at the time
when the tax deals were made.
In similar
cases, Vestager decided against the tax deals for coffee-shop chain Starbucks
by the Netherlands and Italian automaker Fiat by Luxembourg -- both companies
were ordered to pay roughly 30 million euros.
The Amazon
case hinges on the belief that a tax deal between Luxembourg and Amazon in 2003
constituted illegal state aid, giving the company an unfair advantage over
competitors.
Once found
at fault, a country must recover the amount granted in illegal state aid,
potentially a huge amount of money given that some of the tax deals date back
many years.
Amazon has
sharply rejected the allegations, arguing that it employs 1,500 people in
Luxembourg and that its business remains unprofitable in Europe.
Vestager's
biggest decision was by far against Apple in Ireland, which shocked Washington.
The iPhone maker, as well as Ireland, have appealed the decision.
EU Competition Commissioner refers Ireland to the bloc's highest court for failing to collect €13 billion in back taxes from Apple pic.twitter.com/5FhEPXODPu— AFP news agency (@AFP) October 4, 2017
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