The EU turned the screw on US tech giants today, ordering Amazon to repay Luxembourg 250 million euros in back taxes and taking Ireland to 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.
“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 (USD 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 today 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.
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.
Vestager denied that the cases singled out tech giants from the US.
“It’s not about the nationality of the companies. I take it very seriously. No bias, no matter your flag,” she said.
Ireland said the referral to the EU court was “extremely disappointing”, calling the decision “wholly unnecessary”.
For its part, Amazon sharply rejected the tax deal allegations, arguing that it employs 1,500 people in Luxembourg and that its business remains unprofitable in Europe.
“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, adding that it would study its legal options.
Launched in 2014, 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 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.