BRUSSELS (AP) — The European Union’s competition authority on Tuesday opened an investigation into Amazon’s corporate income tax practices on suspicion the online retailer is benefiting from an illegal rebate to stash away most of its profits made in the 28-nation bloc.
The move is part of a wider crackdown on multinational firms’ ability to avoid taxes by shifting profits and costs between countries. Apple Inc., coffee chain Starbucks and the financial arm of carmaker Fiat are also under investigation.
In Amazon’s case, the EU is probing whether a 2003 tax agreement struck between the company and the government of Luxembourg, where Amazon records most of its European profits, is a way to avoid taxes and constitutes illegal state aid, distorting competition.
If the bloc’s executive Commission were to rule against Amazon in the coming months, the Seattle, Washington-based company would likely have to repay taxes for its European operations, its biggest overseas market. Amazon registers its profits from across the EU at its unit in Luxembourg, Amazon EU Sarl.