Amazon EU has won an appeal to Europe’s General Court against a 2017 ruling by the European Commission that ordered it to pay €250 million in back taxes to the government of Luxembourg, which were considered as “illegal state aid.” The Commission reacted with a plea for an international agreement on the taxation of multinationals.
Amazon EU is a Luxembourg-based subsidiary of Amazon that is responsible for sales in the U.K., France, Germany, Italy, the Netherlands, Poland, Spain and Sweden. According to its annual report, Amazon EU suffered last year a 69 percent increase in net losses to €1.18 billion on 36 percent higher revenues of €43.8 billion. The Grand Duchy of Luxembourg is understood to have accepted that the company should not have to pay then any corporate income tax in the country. In fact, Amazon EU claimed a tax credit of €56.4 million for the year, building up to loss carry-forwards of €2.7 billion that the company can use to offset any future profits.
Among other items, Amazon EU reported “raw materials and consumables and other eternal expenses” of €44.19 billion, plus staff costs of €537.9 million and other charges for 2020. Last year’s loss was mainly attributed to higher personnel costs. On the other hand, its Amazon Services Europe subsidiary, which takes care of its marketplace, recorded an increase in profits of 84 percent to €267 million on 47 percent higher revenues of €17.7 billion.
On a global basis, Amazon recently reported a 43.8 percent jump in revenues to $108.5 billion for the first quarter of 2021, with growth of 39.5 percent in North America and 60.4 percent in the rest of the world. Its quarterly net income soared by 219.8 percent to $8.11 billion. For the 2020 financial year, Amazon had reported a 38 percent increase in revenues to $386 billion, leading to a jump in net profit of 84 percent to $21.3 billion.
The Covid-19 pandemic has obviously contributed to boost Amazon’s sales in Europe and the rest of the world. The company has been hiring more and more personnel in Europe to operate a growing number of logistics centers. The group says it has invested more than €78 billion in Europe since 2010, creating thousands of new jobs.