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Amazon’s tax breaks in Luxembourg are ‘state aid’

The European Commission has found in a preliminary ruling that Amazon’s tax breaks in Luxembourg “probably constitute state aid”, the BBC reports.

The Commission launched an investigation into the etailer in October after it was accused of dodging taxes.

Most of Amazon’s European profits are recorded in Luxembourg; however, the etailer reportedly pays a royalty to another firm that holds shares in its head office company. Concerns were raised over whether the amount of this royalty, which lowered the taxable profits of Amazon, was in line with market conditions.

Both the etailer and the Luxembourg finance ministry have denied any wrongdoing.

Drew Herdener, vice president of communications at Amazon Europe told Drapers: “Amazon has received no special tax treatment from Luxembourg—we are subject to the same tax laws as other companies operating here.”

The finance ministry said it cooperated fully with the investigation and was “confident that the state aid allegations are without merit”.

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