EU could tell Amazon to pay Luxembourg back taxes

EU regulators are expected to order Amazon on Wednesday to pay Luxembourg millions of euros in back taxes, a person familiar with the matter said, the latest global company to be hit by an EU crackdown on unfair tax deals.

The European Commission ruling wraps up a three-year long investigation into whether Amazon received an unfair advantage based on a 2003 Luxembourg tax ruling which allows an Amazon subsidiary to pay less tax there than other companies.

The EU competition enforcer estimated a tax bill of about 400 million euros a year ago, two people familiar with the matter had told Reuters at the time. A revised figure is likely to be issued following discussions with other departments in the Commission.

Commission spokesman Ricardo Cardoso and Amazon declined to comment.

The Amazon ruling will come on the same day as the Commission unveils changes to the way sales taxes are levied in the European Union with the aim of tackling fraud and curbing companies’ excessive tax-planning.

The EU competition authority said in 2014 the Amazon subsidiary paid a tax deductible royalty to a Luxembourg-based limited liability partnership which was not subject to the country’s tax regime. It said the royalty was not in line with market rates.

Amazon revamped its European tax practices in 2015 so that it can book sales and pay taxes in Britain, Germany, Spain and Italy instead of channeling all sales through Luxembourg where it is headquartered, a move which may raise its tax bill.

Fastfood chain McDonald’s and French energy company Engie are next in the EU crosshairs over their Luxembourg tax deals.

IPhone maker Apple has already been ordered to pay back arrears of up to 13 billion euros to Ireland, coffee chain Starbucks up to 30 million euros to the Dutch authorities and a similar amount for Fiat Chrysler to Luxembourg.

At least 35 companies, among them Anheuser-Busch InBev and BASF have been told to pay back taxes of about 700 million euros to Belgium because of their participation in an illegal tax scheme.