EC Publishes Non-confidential Version of Luxembourg-Amazon State Aid Decision

EC Publishes Non-confidential Version of Luxembourg-Amazon State Aid Decision

The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also  regularly writes news stories about transfer pricing and international tax law. Alex is reachable on email ( and by phone (+447808558597). 

On February 26, 2018, the European Commission published the non-confidential version of its decision concluding that Luxembourg granted undue tax benefits worth around EUR250m to Amazon.

The Commission, in October last year, concluded that a tax ruling issued by Luxembourg in 2003, and prolonged in 2011, lowered the tax paid by Amazon in Luxembourg without any valid justification. An in-depth investigation in this regard was launched by the Commission in 2014.

According to the Commission, the tax ruling enabled Amazon to shift the vast majority of its profits from an Amazon group company that is subject to tax in Luxembourg (Amazon EU) to a company which is not subject to tax (Amazon Europe Holding Technologies). In particular, the tax ruling endorsed the payment of a royalty from Amazon EU to Amazon Europe Holding Technologies, which significantly reduced Amazon EU’s taxable profits, the Commission concluded.

The Commission’s investigation showed that the level of the royalty payments, endorsed by the tax ruling, was inflated and did not reflect economic reality. On this basis, the Commission concluded that the tax ruling granted a selective economic advantage to Amazon by allowing the group to pay less tax than other companies subject to the same national tax rules. In fact, the ruling enabled Amazon to avoid taxation on three quarters of the profits it made from all Amazon sales in the EU.

The Luxembourg Government is appealing the Commission’s decision. In a press release issued on December 15, 2017, the Government said: “Luxembourg believes that the Commission has not established the existence of a selective advantage. Furthermore, Luxembourg does not share the Commission’s analysis with regard to transfer pricing.”

“This appeal seeks to obtain legal certainty, and does not put into question Luxembourg’s strong commitment to tax transparency and the fight against harmful tax practices. Luxembourg fully adheres to the BEPS project, which will modernize international tax rules and create a global level playing field,” the Government said.