“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed,” said Margrethe Vestager, commissioner in charge of competition policy, said in a statement. “In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules. This is illegal under EU State aid rules. Member States cannot give selective tax benefits to multinational groups that are not available to others.”
The conclusion follows an in-depth investigation launched in October 2014, in which the commission determined that a tax ruling issued by Luxembourg in 2003, and prolonged in 2011, lowered the tax paid by Amazon in Luxembourg without valid justification.
According to the commission, the tax ruling enabled Amazon to shift the vast majority of its profits from an Amazon group company that is subject to tax in Luxembourg (Amazon EU) to a company which is not subject to tax (Amazon Europe Holding Technologies).
Amazon said it was considering an appeal.
“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,” the company said in a statement today.
The news did not seem to have any significant impact on Amazon shares.
As of 12:15 p.m. ET, the firm’s stock was up 1 percent, to $966.80.