Amazon is in cahoots with Luxembourg, according to the European Union, which fined the company 250 million euros (almost $300 million) for illegal tax benefits on Wednesday. Margrethe Vestager, the EU’s commissioner for competition, said, “Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon's profits [in Europe] were not taxed.”
Based on a three-year investigation, the Commission for Competition found that Luxembourg’s tax administrators essentially helped Amazon run a shell corporation. They allege that Luxembourg’s 2003 tax deal with the conglomerate allowed it to form Amazon Europe Holding Technologies, a company that did not have to pay European taxes. (Amazon itself has 1,500 employees in Luxembourg.)*
The holding company claimed a large portion of Amazon’s profits in Europe as its own to avoid said taxes from 2006 to 2014. As is common with shell companies, Amazon Europe Holding Technologies had no employees or offices, and conducted no actual business.
In a press release, Vestager asserted that members of the EU “cannot give selective tax benefits to multinational groups that are not available to others.” She is charging Luxembourg tax authorities with retrieving the funds.
Amazon and Luxembourg both say the arrangement was squeaky clean, and they will probably challenge the decision. “As Amazon has been taxed in accordance with the tax rules applicable at the relevant time, Luxembourg considers that the company has not been granted incompatible State aid,” the country said in a statement. Taking a page from a campaign playbook, Amazon stated, “Our 50,000 employees across Europe remain heads-down focused on serving our customers and the hundreds of thousands of small businesses who work with us.”
With her latest allegations, Vestager solidifies her position as a dogged enforcer of antitrust rules for multinational tech groups that operate in Europe. In June, she fined Google about $2.7 billion for providing skewed price comparison services, and on Wednesday she said the Commission for Competition will engage Ireland in the European Court of Justice for failing to retrieve $15.3 billion worth of back taxes from Apple. Tech companies and the U.S. Congress were also none too happy when the commission came after Apple in 2016. While reviled in Silicon Valley, she is adored by many in Denmark as the inspiration for the main character in Borgen, which is often called the Danish version of The West Wing.
*Update, Oct. 5, 2017: This paragraph has been updated to add detail about how many employees Amazon has in Luxembourg.