Short Reads

European Commission orders the recovery of State aid of around EUR 250 million from Amazon

European Commission orders the recovery of State aid of around EUR 25

European Commission orders the recovery of State aid of around EUR 250 million from Amazon

01.11.2017 NL law

On 4 October 2017, after a long investigation, the European Commission held that a tax ruling between Amazon and Luxembourg constituted illegal State aid [see our November 2015 Newsletter]. The Commission ordered Luxembourg to recover this aid from Amazon, which is estimated to be around EUR 250 million.

The Commission explained that the tax ruling in question allowed Amazon to pay substantially less tax than other companies. More specifically, the Commission stated that the tax ruling enabled Amazon to shift the vast majority of its profits from an Amazon group company (Amazon EU) to another company (Amazon Europe Holding Technologies). Amazon EU is subject to taxation in Luxembourg while Amazon Europe Holding Technologies is not. As a limited partnership, only the partners of Amazon Europe Holding Technologies are subject to taxation. These partners are located in the US and have so far deferred their tax liability.

Amazon EU operates Amazon's retail business in Europe. Amazon Europe Holding Technologies does not have any employees or offices, nor does it carry out any business activities. The holding company is an intermediary between Amazon EU and Amazon in the US. It has intellectual property rights and grants its exclusive use of these rights to Amazon EU. Under the tax ruling, Amazon EU paid royalties to Amazon Europe Holding Technologies, as a result of which Amazon EU's taxable profits were substantially reduced.

The Commission decided that the royalty payments did not reflect the economic reality. According to the Commission, the holding company did not perform any activities to justify the level of the royalties received since it was not involved in the management, development or use of its intellectual property. The royalty payment was therefore contrary to the so-called "arm's length principle" under which payments between two companies in the same group should be in line with arrangements that take place under commercial conditions between independent businesses.

The non-confidential version of the decision has not been published yet. Therefore, the exact methodology used to calculate the illegal advantage enjoyed by Amazon is not fully known. The tax authorities in Luxembourg will use this method to determine the exact amount of the State aid that has to be recovered from Amazon.

This article was published in the Competition Law Newsletter of November 2017. Other articles in this newsletter:

  1. General Court annuls UPC/Ziggo merger decision
  2. General Court rules that luxury watchmakers can limit supply of parts to approved repairers
  3. General Court upholds fine for 'gun jumping' EU merger control procedure
  4. Nike can restrict sales via online platforms within its selective distribution system
  5. Dutch Trade and Industry Appeals Tribunal rules on cover pricing
  6. KLM and Amsterdam Schiphol airport offer commitments to reduce competition concerns

Team

Related news

03.10.2019 NL law
It's in the details: HSBC fine quashed for insufficient reasoning

Short Reads - The General Court annulled the EUR 33.6 million fine imposed on banking group HSBC for its participation in the euro interest rates derivatives cartel. Full annulment was granted based on the Commission's failure to provide sufficiently detailed reasoning for the first step of the fine calculation, establishing the value of sales. As the value of sales could not be established in a straightforward way, the Commission used a proxy. When doing so, the Commission needs to properly explain its reasoning to allow the companies fined to understand how it arrived at the proxy. 

Read more

03.10.2019 NL law
The postman will no longer ring twice: Minister unblocks postal merger

Short Reads - The Dutch Authority for Consumers and Markets (ACM) recently blocked postal operator PostNL's acquisition of its only national competitor, Sandd, because this would create "a monopolist on the postal delivery market". However, the Dutch Minister of Economic Affairs and Climate Policy has overruled the ACM's decision on grounds of public interest. Invoking industrial policy or public interest reasons for merger clearance seems to be catching on.

Read more

03.10.2019 NL law
The ACM has to pay: moral damages awarded to real estate traders

Short Reads - The Dutch Authority for Consumers and Markets (ACM) needs to cough up a total of EUR 120,000 in moral damages to three real estate traders. The Dutch Trade and Industry Appeal Tribunal (CBb) agreed with the real estate traders that the annulment of the ACM's cartel decisions against them was insufficient compensation for the harm they suffered as a result of the length of the procedure and the press coverage of their cases.

Read more

02.10.2019 NL law
Politie aansprakelijk voor schietpartij Alphen aan den Rijn

Short Reads - De politie is aansprakelijk voor de schietpartij in een winkelcentrum Alphen aan den Rijn in 2011. Dat oordeelt de Hoge Raad in zijn arrest van 20 september 2019 (ECLI:NL:HR:2019:1409). Bij deze schietpartij vonden zes mensen de dood en raakten zestien mensen gewond. De dader doodde ook zichzelf. Nabestaanden van dodelijke slachtoffers, slachtoffers die gewond raakten en winkeliers spreken de politie aan tot schadevergoeding. Zij voeren aan dat de politie de vergunning voor de wapens die de man gebruikte, niet had mogen verlenen.

Read more

03.10.2019 NL law
Margrethe Vestager to play matchmaker between enforcement and regulation

Short Reads - Current Competition Commissioner Margrethe Vestager may face even greater challenges in the next European Commission. President-elect Ursula von der Leyen has not only nominated Vestager for a second term as Commissioner for Competition, but has also asked her to coordinate the European Commission's digital agenda. As a result, Vestager may soon be tackling digital issues through competition enforcement whilst also proposing additional regulation to deal with these (and related) issues pre-emptively.

Read more

02.10.2019 NL law
Dutch national police service liable for unlawful granting of firearms permit

Short Reads - In a recent decision (ECLI:NL:HR:2019:1409), the Supreme Court has decided that the Dutch national police force is liable for damage suffered by victims of a shooting which took place in a shopping centre in 2011; an event that shocked the Netherlands. The Supreme Court held that the police had unlawfully granted a permit for the firearms used in the shooting.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring