Luxembourg tax order to the European Commission. Since Brussels demanded the Grand Duchy in 2017 to claim 250 million euros from Amazon in supposedly unpaid taxes , the Luxembourg Treasury has not only demanded nothing from the company but has returned 1,617 million euros from 2018 to date. In the last financial year, Amazon declared revenues of 51,322 million euros in Luxembourg, but it has been accumulating losses year after year until adding red numbers of 4,189 million euros in the last five years.
After the presentation of two appeals by the Government of Luxembourg and Amazon itself, last year the General Court of the European Union (TGUE), which has its headquarters precisely in Luxembourg, annulled the decision of the Commission to claim the taxes earrings to the e-commerce giant. Brussels, however, has not given up and has filed an appeal, which is still pending resolution . In the report of its latest annual accounts, Amazon, which denies tax avoidance, is willing to fight and ensures that “we will continue to defend ourselves vigorously in this matter.”
Losses since 2017
The company, which invoices its operations in different European countries, including Spain, through Luxembourg, has registered dizzying growth in recent years, doubling its turnover since 2017. Specifically, the company has increased its sales by 106% from 2017 to 2021. The last year has also been the year in which the tax refund by Luxembourg has been greater, since it amounted to a total of 1,026 million , after having registered a negative result of 1,163 million euros , the second largest in its history, after the losses of 1,187 million that it declared in 2020.
Amazon’s is not, however, the first setback suffered by Brussels in the open battle to prevent large multinationals from avoiding paying the taxes that correspond to them. In 2020, the Court of Justice also agreed with Ireland and annulled the decision of the European Commission in which it demanded that Dublin demand taxes of 13,000 million euros from Apple . The Commission had determined that Ireland had acted against European regulations by equating the tax exemption for the apple giant with State aid, which distorted competition and the internal market in favor of the North American multinational. Brussels considered that Ireland would have granted illegal tax aid to the company, without having tax residence in the country.
The origin of the dispute
In the case of Amazon, the European Commission opened a formal investigation in October 2014 to assess the decisions of the Luxembourg Treasury regarding corporate income tax. Four years later, in 2017, Brussels announced its decision. The Luxembourg tax authorities did not comply with the European Union rules on state aid . Given this statement, the country’s authorities had to calculate and recover the additional taxes corresponding to the period between May 2006 and June 2014. Luxembourg, however, in 2017 appealed the decision taken from Brussels.
Amazon explained that “Luxembourg calculated an initial recovery amount, consistent with the decision of the European Commission, which we deposited in escrow in March 2018, pending the conclusion of all appeals.” However, the company put up a fight and showed that it was not satisfied with the decision of Brussels and in May of the same year it appealed, considering that ” the decision of the European Commission is unfounded “.
The sanctioning file opened by Brussels is not, however, the only one that Amazon has faced. The e-commerce company was investigated as early as 2012 by the French Tax Administration (FTA) for tax avoidance . “We received a proposed tax settlement notice for calendar years 2006 through 2010 regarding the allocation of income between foreign jurisdictions,” Amazon acknowledged in the 2017 accounts.
Last year, the French Minister of Economy and Finance, Bruno Le Maire, already insisted that Amazon had to pay for the future international tax device for large digital groups, and that a solution would be to differentiate in their businesses those that will be taxed and those that will be taxed. no. ” Amazon must be in the field of taxation “, stressed Le Maire, in response to the debate on whether the US company could get rid of this tax.