By Philip Blenkinsop
BRUSSELS (Reuters) – Luxembourg took only two weeks to sign an agreement in aesthetic part that allowed Amazon to move a large part of its European profits to a tax-exempt entity, of According to regulators antitrust EU.
The European Commission, which is responsible for matters of competition and state aid in the European Union, announced in October that it had opened an investigation into a tax decision introduced in 2003 and published on Friday the details of your case.
The research, one more open to large international companies, focusing on whether Luxembourg failed to comply with state aid rules of the EU to allow Amazon to operate almost free of taxes in Europe.
The leaks put pressure on the president of the European Commission, Jean-Claude Juncker, who was Prime Minister of Luxembourg, explain their role in policy prosecutors in the country.
The document released on Friday described the structure of the online distributor with a Luxembourg company which operates as headquarters operations in Europe and operates all of its European websites.
The net turnover of the company, called LuxOpCo was 13,600 million in 2013, about one fifth of global sales.
Research Commission focuses on the relationship between LuxOpCo, which generates its revenue from the websites of Amazon EU, and Lux SCS, which royalties LuxOpCo received and was not taxable in Luxembourg.
The report states that there are doubts whether the transfer prices agreed by Amazon Luxembourg reflect what an independent prudent operator would have accepted under normal market conditions.
FAST FAULT
The Commission noted further that the ruling requested by Amazon was evaluated and accepted by Luxembourg within just 11 working days.
The presentation of royalty payments as a percentage of revenue, appeared to be a “cosmetic fix” .
“It also follows from the above that Amazon has a financial incentive to exaggerate the amount of royalty to implement the agreement price approved by the contested decree transfer tax,” said the document.
The decree remained in force for over a decade later, in 2014, the Commission document, much longer than other EU members indicated period.
In that decade, billing Amazon Global had grown explosively, with sales nearly 15 times higher than those of 2003.
The 23-page document, dated October 7 and signed by former EU Competition Commissioner Joaquin Almunia concluded that Luxembourg Amazon seemed to have given an unfair advantage.
“The Commission’s preliminary view is that the tax decree of November 5, 2003 approved by Luxembourg for Amazon constitutes aid State … and the Commission has doubts at this stage about the compatibility of this decision with the internal market “.
The Commission is also investigating the taxation of Italian Fiat car in Luxembourg, Ireland Apple and Starbucks in the Netherlands.
The current Competition Commissioner Margrethe Vestager has said he wants to decide on the four cases in the second quarter. The recipient of unlawful State aid normally have to return money to the State.
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