A European Union lawyer has determined that Amazon’s attempts to reduce its taxes in the bloc have broken the union’s state-aid regulations. Interestingly, the efforts were reported by Bloomberg as dubbed code-name ‘007’, alluding to a James Bond spy thriller
“Project Goldcrest — it sounds like the title of a James Bond movie, but it is not,” it’s the name “Amazon gave to a complex tax construction by which it fundamentally reorganized its global business,” European Commission attorney Paul-John Loewenthal told a court hearing.
“In 2006, that project had one purpose to ensure that Amazon would avoid paying tax on its European profits.” Under that plan, “Luxembourg provided a measure to Amazon by which Amazon could exempt the vast majority of its European profit from taxation in return for investments in Luxembourg, thus affecting intra EU trade and distorting competition,” he said. “That is the very definition of fiscal state aid.”
Related: NGOs Say EU Amazon Antitrust Probe Has Many Issues
The European Union’s executive arm is challenging a ruling by a lower court against an e-commerce firm that would require the repayment of €250 million ($265 million) in illegal subsidies – an action that could be translated into significant lossfor all involved. The case has been taken to higher courts to determine the outcome.
At Thursday’s hearing, Amazon hit back at the Commission, calling its appeal “flawed” and without merit. “The commission itself acknowledged in the decision that Amazon structure at the time is not at issue and Amazon paid taxes on all of what the commission calls European profits,” said Michel Petite, a lawyer at Clifford Chance, who works for Amazon.
A global push for more tax transparency was fuelled in 2014 by the so-called Luxleaks revelations by a group of investigative reporters, who published thousands of pages detailing secret tax arrangements between Luxembourg and multinational companies including Disney, Microsoft, Skype and Pepsi.
