BRUSSELS, Oct. 4 (Xinhua) -- European Union (EU) regulators on Wednesday ruled that Luxembourg granted undue tax benefits to Amazon of around 250 million euros (294 million U.S. dollars), ordering the country to recover it.
The decision came following an in-depth investigation launched three years ago. The European Commission, the EU's executive arm, concluded that a tax ruling issued by Luxembourg helped lower the tax paid by Amazon.
The EU said Luxembourg's wrongdoing enabled Amazon to shift the vast majority of its profits from one subsidiary in Luxembourg to the other "empty shell" company which claimed holding Amazon's intellectual property rights and was not subject to tax.
As a result, three quarters of Amazon's profits were not taxed, said EU Commissioner Margrethe Vestager who is in charge of competition policy.
"In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules," Vestager told a press conference.
"This is illegal under EU state aid rules. Member states cannot give selective tax benefits to multinational groups that are not available to others," the commissioner added.
In Wednesday's decision, the Commission as well set out the methodology to calculate the value of the competitive advantage granted to Amazon. On the basis of available information, this was estimated to be around 250 million euros, plus interest, said the Commission in a statement.
"The tax authorities of Luxembourg must now determine the precise amount of unpaid tax in Luxembourg, on the basis of the methodology established in the decision," said the statement.
Since June 2013, the Commission has been investigating the tax ruling practices of member states.
In October 2015, the Commission concluded that Luxembourg and the Netherlands had granted selective tax advantages to Fiat and Starbucks, respectively.
In August 2016, the Commission concluded that Ireland granted undue tax benefits of up to 13 billion euros to Apple.
The Commission also has two ongoing in-depth investigations into concerns that tax rulings may give rise to state aid issues in Luxembourg, as regards McDonald's and GDF Suez (now Engie).
