The European Commission (EC) is committed to reporting the first results in its ongoing investigation into the legality of Amazon and Luxembourg’s tax arrangements in the next quarter, after the European and International Booksellers Federation (EIBF) submitted evidence to its inquiry.
The EC revealed last October it had opened a formal investigation into whether Amazon’s complex tax arrangements in Luxembourg—where its European headquarters are based—amounted to state aid. Specifically, it is investigating whether the Luxembourg tax ruling clears Amazon EU Sàrl to pay large royalties to a sister operation—a Luxembourg limited partnership not subject to tax—and therefore depressing its taxable profits.
In January the EC investigators released an open letter with their preliminary findings, revealing that “at this stage, the commission considers that the contested tax ruling appears to result in a reduction of charges that should normally be borne by the entity concerned in the course of its business, and should therefore be considered as operating aid.” The letter added: “The commission has doubts at this stage as to that ruling’s compatibility with the internal market.”
The investigation could have political ramifications because Luxembourg’s tax deal with Amazon was negotiated in 2003, when Jean-Claude Juncker [pictured[, who became European Commission president in November, was serving as Luxembourg’s premier.
As well as calling for more information from the Luxembourg authorities, the investigators also asked for submissions of evidence from interested third parties, with the deadline passing last week (5th March).
The EIFB revealed to The Bookseller that it had submitted evidence to the inquiry; its submission reads: “The EIBF welcomes the investigation by the commission concerning Amazon’s fiscal practices and seizes the opportunity offered by the commission to send its comments on behalf of its members . . . EIBF and its members have always advocated for a level playing field for all book retailers.
“Booksellers in membership with EIBF pay their taxes and contribute to their local economies by creating jobs within their community.
“Amazon’s fiscal practices have long been questioned by the bookselling community. The EIBF stands for a free and open market space with fair competition securing a variety of booksellers to offer a broad range of titles—both online and offline. Indeed, consumers suffer when single companies monopolise the market whether in the US or
“Consumers are the ultimate beneficiaries of a level playing field governing commercial conditions and favouring healthy competition between retailers . . . they can also pose a threat to all e-book sellers and distributors in various countries.”
A spokesperson for the EC said it would now analyse the comments made by the interested third parties in the context of the ongoing investigation, and added that it was “committed to presenting first results . . . by the second quarter of this year.”
An Amazon spokesperson has previously said of the enquiry: “Amazon has received no special tax treatment from Luxembourg—we are subject to the same tax laws as other companies operating here.”
The EC is also carrying out similar investigations into the tax affairs of Starbucks, Apple and Fiat.