Amazon has said it “received no special tax treatment” in response to the European Commission opening an investigation into its tax affairs in Luxembourg.
Brussels is examining the online retail giant's arrangements with the Luxembourg government claiming it amounted to illegal state aid in the latest crackdown on companies and countries believed to be negotiating corporate tax rates.
The investigation concerns an agreement dating back to 2003 that is still in place. Amazon’s European subsidiary records its profits in the region in Luxembourg however through a LLP (Limited Liability Partnership) structure, it pays no corporate tax there, instead paying a tax deductible royalty.
This royalty may not be “in line with market conditions”, the Commission said in a statement.
The crackdown by Brussels, which first kicked-off in June, has targeted Apple and Fiat with similar investigations over tax arrangements made in Ireland and Luxembourg respectively, and which may constitute anti-competitive and illegal state aid.
An investigation of Starbucks and its arrangements in the Netherlands is also expected shortly.
The companies could face coughing up billions of pounds more tax if the EU rules against them.
Brussels’ competition commissioner Joaquín Almunia said: “It is only fair that subsidiaries of multinational companies pay their share of taxes and do not receive preferential treatment which could amount to hidden subsidies.”