EU Aims To Rule On Amazon's Luxembourg Tax Deal By July

20/05/2016 6:28 AM AEST | Updated 20/05/2016 6:28 AM AEST
Mike Segar / Reuters
Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016.

BRUSSELS - EU state aid regulators aim to rule on Amazon's (AMZN.O) tax deal with Luxembourg by July, two people familiar with the matter said on Thursday, and it may order the country's tax authorities to recover about 400 million euros ($448 million) in back taxes.

The European Commission's decision will come after a near-two year investigation into whether a Luxembourg 2003 tax ruling for an Amazon subsidiary allows the company to pay less tax there than other companies, giving it an unfair advantage.

The 400-million-euro figure is a preliminary assessment and may be revised after discussions with other units in the Commission, one of the sources said.

The two sources said a panel of experienced officials met recently to review the strengths and weaknesses of the case, a move usually reserved for complex and high-profile cases.

An EU official questioned whether the commission's final decision on the legality of the tax deal would be in line with the current thinking of officials working on the case.

The European Commission declined comment. Luxembourg and Amazon had no immediate comment.

Amazon overhauled its European tax practices in May last year allowing it to book sales and pay taxes in Britain, Germany, Spain and Italy instead of channeling all sales through Luxembourg. The move could raise its tax bill.

Multinational firms face increasing public scrutiny of their tax affairs following popular outrage at revelations of complex offshore schemes to minimize payments. The European Commission, led by former Luxembourg premier Jean-Claude Juncker, has pledged to make rules more transparent across the EU.

The EU's crackdown on so-called sweetheart deals involving U.S. firms has been criticized by U.S. Treasury Secretary Jack Lew who in February demanded that European Competition Commissioner Margrethe Vestager reconsider such probes because they created disturbing precedents.

This would be the fourth ruling by the EU competition enforcer following an order in October last year to Luxembourg to claw back up to 30 million euros from Fiat Chrysler Automobiles <NV FCHA.MI> and a similar order to the Dutch tax authorities related to Starbucks Corp (SBUX.O).

The Commission in January told Belgium to recover around 700 million euros from 35 companies including Anheuser-Busch InBev (ABI.BR), BP (BP.L) and BASF (BASFn.DE) because of their participation in an illegal tax scheme.

Other outstanding similar cases are Commission probes of whether Apple (AAPL.O) paid too little tax in Ireland and burger chain McDonald's too little in Luxembourg.

(Reporting by Foo Yun Chee; Editing by Alexandra Hudson)

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