Today the European Union ordered Amazon to pay $295 million in unpaid taxes to Luxembourg, the site of Amazon's European headquarters, the Associated Press reports. It's also going after Ireland to collect a staggering $15 billion in back taxes from Apple.
It seems Amazon has had a deal with Luxembourg since 2003: the company would pay considerably less taxes in exchange for setting up shop and doing its Amazon thing, and presumably creating all those tech jobs making every city in the U.S. do crazy and embarrassing things.
The EU's European Commission for Competition takes issue with these kinds of deals that let giant multinational corporations avoid paying taxes when local companies, which are subject to the same rules, don't have the ability to make these kinds of deals. It's seen as an issue of fairness.
According to the AP report: "The EU has taken aim at such past deals, which member states had used to lure foreign companies in search of a place to establish their EU headquarters. The practice led to EU states competing with each other and multinationals playing them off one another."
Margrethe Vestager, European Commissioner for Competition, said in a statement that since 2003, Amazon never had to pay taxes on about three quarters of its profits in Europe. “In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules,” Vestager said.
Quartz has an interesting piece on why Europe goes after big companies for illegal tax deals and abuses of power, and U.S. agencies like the Federal Trade Commission (FTC) are much more reluctant to do the same.
UPDATE: We got this statement from an Amazon spokesperson.
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. We will study the Commission's ruling and consider our legal options, including an appeal. Our 50,000 employees across Europe remain heads-down focused on serving our customers and the hundreds of thousands of small businesses who work with us.