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

02.04.2020 NL law
ACM played high stakes and lost: no more fixed network access regulation

Short Reads - The ACM’s failure to meet the requisite standard of proof has led to the fixed networks of Dutch telecom providers KPN and VodafoneZiggo being free from access regulation. The Dutch Trade and Industry Appeals Tribunal ruled that the ACM had failed to demonstrate the existence of collective dominance, and that KPN and VodafoneZiggo would tacitly coordinate their behaviour absent regulation.

Read more

26.03.2020 BE law
​I am suffering significant financial losses as a result of the spread of the corona virus. Is there a possibility of State aid?

Short Reads - COVID-19 brings certain questions to centre stage regarding State aid. In this short read, Peter Wytinck, Sophie Van Besien and Michèle de Clerck discuss the possibility of State aid in case of significant financial losses as a result of the spread of the corona virus.

Read more

02.04.2020 NL law
Claims assigned to a litigation vehicle: who needs to prove what?

Short Reads - Two recent decisions from the Amsterdam Court of Appeal have confirmed that litigation vehicles cannot come empty-handed to the court, and should provide documentation regarding the assignments of claims they submit. The Dutch legal system allows companies and individuals to assign their claims to a “litigation vehicle” or “claims vehicle” that bundles those claims into a single action. In its decisions of 10 March 2020, the Court of Appeal ruled that it is up to litigation vehicles to prove that the assignments can be invoked against the debtor. 

Read more

10.03.2020 NL law
De AVG staat niet in de weg aan de verwerking van persoonsgegevens door een toezichthouder tijdens een bedrijfsbezoek

Short Reads - Bedrijven die met toezicht worden geconfronteerd, zijn gehouden op verzoek van een toezichthouder in beginsel alle informatie te verstrekken. Met de komst van de Algemene verordening gegevensbescherming (AVG) is in de praktijk de vraag opgekomen of een toezichthouder bevoegd is om persoonsgegevens die onderdeel uitmaken van de gevraagde informatie te verwerken.

Read more

02.04.2020 NL law
EU competition policy agenda: full to the brim

Short Reads - The European Commission’s competition policy agenda stretches to 2024 and contains plans for many new or revised rules and guidelines. Recent publications, such as the New Industrial Strategy for Europe, shed more light on the Commission’s initiatives and their possible impact on parties from both inside and outside the European Union (EU). These new initiatives include temporary state aid rules to address the effects of the Corona crisis, consultations on the Block Exemption Regulations, and new measures in respect of (primarily) third-country companies.

Read more

05.03.2020 NL law
CBb confirms: no cartel fine, still interest to appeal cartel decision

Short Reads - Companies can challenge a decision establishing that they committed a competition law violation, even if no fine was imposed on them. The CBb – the highest court for public enforcement of cartel cases – recently confirmed that the absence of a fine does not affect a company’s interest to appeal. Consequently, parent companies held liable for a subsidiary’s cartel infringement can still challenge a cartel decision, irrespective of whether fines were imposed on them separately.

Read more

This website uses cookies. Some of these cookies are essential for the technical functioning of our website and you cannot disable these cookies if you want to read our website. We also use functional cookies to ensure the website functions properly and analytical cookies to personalise content and to analyse our traffic. You can either accept or refuse these functional and analytical cookies.

Privacy – en cookieverklaring