Amazon.com must pay nearly $300 million in back taxes to Luxembourg, European authorities said Wednesday after concluding that the tech giant had benefited from an illegal tax arrangement dating to 2003.
The company, which is being fined about 250 million euros following a three-year investigation, is the latest in a string of U.S. technology firms to face tax-related penalties in the European Union. An Amazon spokeswoman said the company is considering an appeal. (Jeffrey P. Bezos, the founder and chief executive of Amazon, also owns The Washington Post.)
According to the European Union, Amazon put “the vast majority” of its profits in a Luxembourg-based holding company, which allowed the company to avoid paying taxes on the bulk of its European profits between 2006 and 2014. Under Luxembourg’s tax laws, Amazon’s holding company — a limited partnership without employees, offices or business activities — was not subject to corporate taxes, which “granted a selective economic advantage to Amazon,” according to European authorities.
“Luxembourg gave illegal tax benefits to Amazon,” Margrethe Vestager, a commissioner for the European Union, said in a statement. “As a result, almost three quarters of Amazon’s profits were not taxed.”
“Member States,” she added, “cannot give selective tax benefits to multinational groups that are not available to others.”
Separately, on Wednesday, the European Commission said it would take Ireland to court for failing to collect roughly 13 billion euros in back taxes from Apple by its January deadline. Apple, European authorities said last year, had paid a tax rate as low as 0.0005 percent on its European profits for more than a decade.
Other companies, including fast-food giant McDonald’s and French utility Engie, are also being investigated for their tax practices in Luxembourg. They are among dozens of multi-national companies that have been ordered by European authorities in recent years to fork over back taxes, including Starbucks (which was ordered to pay about 30 million euros to the Netherlands), Fiat (30 million euros in Luxembourg) and Anheuser-Busch InBev and BP (which were part of a group of 35 companies ordered to pay back about 500 million euros to Belgium).
Amazon, which has since changed the way it operates and pays taxes in Europe, says it did not break any rules. The world’s largest online retailer last year posted a $2.4 billion profit on revenue of $136 billion.
“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,” a company spokeswoman said in an email. “We will study the Commission’s ruling and consider our legal options, including an appeal.”
European authorities have also ordered Amazon to pay interest on the back taxes, although there will not be additional fines or penalties. The repayment “simply restores equal treatment with other companies,” the commission said.
In March, Amazon won a $1.5 billion tax case against the Internal Revenue Service related to the company’s operations in Luxembourg.
A few months later, the company said it was under federal investigation for possibly violating U.S. sanctions on Iran. In a government filing, the company said it sold and delivered about $34,000 worth of products — including books, software, consumer electronics, musical instruments and jewelry — to an Iranian embassy, as well as to others with links to the Iranian government, between January 2012 and June 2017. The company says it also sold about $300 worth of items to a person on the U.S. government’s terrorism watch list.