Amazon Slapped With $294 Million Bill for Back Taxes in Europe

Tech juggernaut set up a shell company in Luxembourg to avoid paying fair share, according to European Commission

Last Updated: October 4, 2017 @ 8:06 AM

Something is rotten in the state of Denmark — or in Amazon’s case, in the country of Luxembourg.

The European Commission has ordered the tech juggernaut to pay €250 million — the equivalent of $294 million — in back taxes following an investigation into an illegal tax break the company received in Luxembourg.

“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits [in Europe] were not taxed,” said Margrethe Vestager, the European official in charge of competition policy.

The commission found Luxembourg had illegally allowed Amazon to, in essence, split into two companies since setting up in the country in 2003 — with one side of Amazon collecting royalties off the other end of the company selling products online. \

The side of Amazon collecting royalties wasn’t paying taxes in Europe, and had no offices or employees. This allowed the company to skirt paying its full tax burden, according to Vestager.

“Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules,” Vestager said.

Amazon responded to the decision with a statement: “We will study the Commission’s ruling and consider our legal options, including an appeal.”

Jeff Bezos’ company is the latest American tech giant to face increased scrutiny abroad. Earlier this year, Google was hit with a $2.7 billion fine by the European Union for pushing its own search results above its competitors.

And that’s chump change compared to what the EU smacked Apple with last year — a nearly $15 billion fine for back taxes in Ireland.

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