Amazon is to face a formal investigation into its tax practices in Europe.
The European Commission announced it would look into an agreement the online retailing giant made with the Grand Duchy of Luxembourg.
The EC alleged a deal between Luxembourg and Amazon amounted to state aid and distorted competition.
According to EU competition commissioner Joaquin Almunia, most of Amazon's European profits "are recorded in Luxembourg but are not taxed in Luxembourg."
He said the Amazon subsidiary in Luxembourg records most of the group's European profit and then pays a royalty to another entity in Luxembourg.
"At this stage the Commission considers the amount of this royalty, which lowers the taxable profits of Amazon EU Srl each year, might not be in line with market conditions," said Almunia.
"National authorities must not allow selected companies to understate their taxable profits by using favourable calculation methods," he 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.
"This investigation concerning tax arrangements for Amazon in Luxembourg adds to our other in-depth investigations launched in June. I welcome that cooperation with Luxembourg has improved significantly."
"Fair tax competition is fundamental for a healthy Single Market and our common economic prosperity," added Algirdas emeta, commissioner for taxation. "As we work together to restore growth and competitiveness, it is essential to tackle the harmful tax practices which erode the tax bases of EU Member States. Fair play in taxation must be the rule."
In a short statement to the media, Amazon denied this and said it had "received no special tax treatment from Luxembourg".
"We are subject to the same tax laws as other companies operating here," it added.
In June, the EC launched an inquiry into Apple's tax arrangements in Europe
-
Meta isn’t playing ball with the EU on the AI ActNews Europe is 'heading down the wrong path on AI', according to Meta, with the company accusing the EU of overreach
-
‘Confusing for developers and bad for users’: Apple launches appeal over ‘unprecedented’ EU fineNews Apple is pushing back against new app store rules imposed by the European Commission, suggesting a €500m fine is a step too far.
-
‘Lean into it’: Amazon CEO Andy Jassy thinks enterprises need to embrace AI to avoid being left behind – even if that means fewer jobs in the futureNews Amazon CEO Andy Jassy thinks companies need to "lean into" AI and embrace the technology despite concerns over job losses.
-
Microsoft workers face a fresh round of layoffs – here’s who could be impactedNews Microsoft will cut 6% of its workforce, equivalent to around 6,000 workers, as part of its latest cost-cutting drive.
-
Apple, Meta hit back at EU after landmark DMA finesNews The European Commission has issued its first penalties under the EU Digital Markets Act (DMA), fining Apple €500 million and Meta €200m.
-
‘If you want to look like a flesh-bound chatbot, then by all means use an AI teleprompter’: Amazon banned candidates from using AI tools during interviews – here’s why you should never use them to secure a jobNews Amazon has banned the use of AI tools during the interview process – and it’s not the only major firm cracking down on the trend.
-
‘Europe could do it, but it's chosen not to do it’: Eric Schmidt thinks EU regulation will stifle AI innovation – but Britain has a huge opportunityNews Former Google CEO Eric Schmidt believes EU AI regulation is hampering innovation in the region and placing enterprises at a disadvantage.
-
The EU just shelved its AI liability directive
News The European Commission has scrapped plans to introduce the AI Liability Directive aimed at protecting consumers from harmful AI systems.
