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European Commission sanctions Amazon in Luxembourg and Apple in Ireland

The American digital giants are regularly accused of practicing tax optimization through financial fixtures that put their taxes down.

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European Commission sanctions Amazon in Luxembourg and Apple in Ireland
On Wednesday, 4 October, European Commission launched a new offensive against tax arrangements of Amazon in Luxembourg and Apple in Ireland.

Almost three years to day after having opened a thorough investigation against tax practices of Amazon, European executive demanded from American company that it reimburses 250 million euros to Luxembourg tax authorities who have , according to him, granted "disguised subsidies".

The European Commission has also decided to tackle Ireland, which has still not recovered from Apple more than 13 billion euros of unpaid taxes, as it had been ordered a little over a year ago.

The American digital giants are regularly accused of practicing tax optimization through financial fixtures that put ir taxes down. They artificially transfer profits made throughout EU in a single Member State, such as Ireland or Luxembourg, where y benefit from a favourable tax rate.

Three-quarters of Amazon's profits escape tax

The European headquarters of Amazon is located in Grand Duchy, with which company had passed a tax agreement in 2003, renewed in 2011. "Almost three-quarters of Amazon's profits were not taxed." In or words, Amazon was able to pay four times less taxes than or local companies subject to same national tax rules, said European Commissioner for Competition, Margre Vestager.

Amazon immediately challenged this decision and announced "consider all legal options, including a call". As for Luxembourg, he said he wanted to "analyse decision of European Commission".

Ireland requested to recover tax arrears

"We have decided today to assign Ireland to EU Court of Justice for not implementing our decision," said Ms. Vestager. Apple's headquarters in Europe is located in Cork, Ireland, where company records all benefits made in Europe, Africa, Middle East and India.

In response, Irish Ministry of Finance has made "significant progress on this complex subject" and considers that European Commission has taken a "totally unnecessary" decision.

Or groups in sights

In addition to Amazon, McDonald's and Engie are also in line with Commission as regards ir tax arrangements in Luxembourg.

They are not only ones: In October 2015, European executive also demanded from Starbucks and Fiat reimbursement of aid received "illegally" respectively from Nerlands and Luxembourg. Like Ireland, se two countries appealed to Commission's decision.

The Commission has also asked Belgium to recover 700 million euros of taxes to which 35 multinationals have escaped – including AB InBev and BASF – through arrangements that are not in line with European law.

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