Brussels, 16/01/2015 (Agence Europe) - On Friday 16 January, the European Commission published a non-confidential version of its October 2014 decision to launch an investigation into into transfer pricing arrangements on corporate taxation of the US multinational, Amazon, in Luxembourg.
This is simply one stage in an ongoing investigation, explained Ricardo Cardoso, a European Commission spokesman (see EUROPE 11171), adding that the final outcome, as for the other investigations into tax rulings in Luxembourg for Fiat Finance & Trade, in Ireland for Apple and in the Netherlands for Starbucks, would be revealed in the spring.
In its decision, the Commission looks at the selective advantage that Amazon may gain from the way the taxable base of LuxOpCo (Amazon EU Sarl) is calculated, an Amazon subsidiary registered in Luxembourg that receives the profits for Amazon's other European companies. The methodology uses a complex and unusual exaggeration of OECD guidelines that reduces LuxOpCo's taxable profits to €70 million, transferring a huge amount of its income, some €500 million a year, to another Luxembourg subsidiary of Amazon, Lux SCS, whose business is tax-free.
The tax ruling signed by Luxembourg, which does not seem to include any special mention of the size of the transfers made by Amazon's European subsidiaries, is alleged to underestimate the strategic nature of the LuxOpCo company for the multinational as a whole. Moreover, the speed at which Luxembourg validated the tax ruling (a mere 11 working days) raises questions.
The European Commission seems happy with the level of cooperation provided by Luxembourg, saying that it has fully collaborated with the Commission. In a press release, Luxembourg says it “has submitted all requested information to the Commission and is fully cooperating with the Commission in the investigation. Among others, the detailed transfer pricing reports requested by the Commission have also been provided. Luxembourg is confident that the allegations of State aid in this case are unsubstantiated and that it will be able to convince the Commission in due time of the legitimacy of the tax ruling and that no selective advantage has been granted.” (MB)