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EU opens probe into Amazon's tax affairs in Luxembourg


First published in the Wall Street Journal, 7 October 2014

European Union regulators opened a formal probe into Amazon’s tax arrangements in Luxembourg, snaring another major US company in a high-profile investigation that has already targeted Apple and Starbucks.

The investigation marks the latest phase in a broader clampdown on tax avoidance by multinationals in Europe, where governments and regulators are seeking to bolster revenues and address concerns that big international groups have an unfair advantage over local companies.

Some tax experts questioned the focus of the EU’s widening investigation, which comes amid a broader European backlash against US tech companies in the wake of revelations that the US National Security Agency had spied on European citizens.

“It is curious that they should pick high-profile targets that would hit the press", said Keith O’Donnell, Taxand. “You’d expect the European Commission to pick cases on more objective grounds.”

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Taxand's Take

Many experts suspect that the probes are a back-door way for the commission to pressure countries such as Ireland and Luxembourg to change their tax codes, an area that remains the jealously guarded preserve of national governments. Developments over the coming months should be closely watched. 

Taxand's Take Author

Keith O'Donnell
Taxand Board member & Taxand global real estate tax service line leader