E.U. probe of sweetheart tax deals spreads to Amazon

July 4, 2014, 1:10 PM UTC
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The European Union has widened its probe into sweetheart deals on tax to Amazon.com Inc. (fortune-stock symbol=”AMZN”],  the  Financial Times reported Friday.

The development suggests that Europe’s antitrust watchdogs are already expanding the scope of an investigation they launched in June to find out whether the arrangement offered by certain countries to multinational companies constituted a form of illegal state aid.

At the time, the E.U. Commission’s Competition directorate had opened three specific investigations into the tax arrangements of Apple Inc. (AAPL) in Ireland, Starbucks Corp. (SBUX) in the Netherlands and Italian carmaker Fiat SpA (FIATY) in Luxembourg.

“We’re looking into what kind of arrangement Luxembourg has with Amazon,” the newspaper quoted an E.U. official as saying.

Amazon generated over $18 billion in sales in the 28-country E.U. last year, and channeled them primarily through a Luxembourg-based subsidiary,  Amazon E.U. S.a.r.l.   That has riled other countries such as France and the U.K., who feel they are missing out on much-needed tax revenue. Amazon paid  only 4.2 million pounds ($7 million) of tax in the U.K. on 4.3 billion pounds of revenue from U.K.-based customers last year.

A spokesman for outgoing Competition Commissioner Joaquin Almunia said it was “entirely premature” to speculate on new investigations, but repeated that the Commission “continues to gather information about certain tax practises in several member states, in order to assess the situation from the point of view of E.U. state aid rules.

Amazon didn’t respond immediately to a request for comment. Luxembourg said in  June that it “has not granted corporations any illegal state aid”.

Tax policy is historically a matter for member states, rather than for Brussels, and Luxembourg and Ireland have been particularly feisty in the past about E.U. attempts to abolish one of the few competitive advantages they have within Europe.

Luxembourg had initially refused to comply with the Commission’s request for information on its arrangements with Fiat, saying it had no jurisdiction.