16th January 2015

EC likely to consider Luxembourg´s tax deal with Amazon illegal

On 16 January, the EC published some details on the on-going state-aid investigation against Luxembourg. The case involves the country´s tax deal with Amazon, the American online retailer. Amazon´s EU central, LuxOpCo, is based in Luxembourg and had a net revenue of €13.6 billion in 2013. LuxOpCo pays a license fee for using Amazon´s know-how to another Luxembourgish firm, Lux SCS. The license fee is not subject to taxes and Lux SCS does not pay corporate taxes under Luxembourgish law, either. This tax arrangement was cleared by the Luxembourgish tax authority in 2003. The deal, together with a very high license fee, allows Amazon to pay as little as €60 million in corporate taxes in the EU. Moreover, the EC does not like the fact, that the tax arrangement was cleared in only 11 days back in 2003, and was never revised. Given these, the tax deal cleared by Luxembourg strongly resembles state aid. However, the investigation is not yet over and the EC asked for more documents from Luxembourg.

The Amazon case is one of many on-going state-aid investigations initiated by the EC. The EC considers some Member States´ tax regimes illegal under state-aid rules. The most known cases include Apple, Starbucks or Fiat. Recently, the EC broadened the investigations to cover all Member States.

For more, click here and here. For full EC document, click here.

Members of the American Chamber of Commerce in the Czech Republic