Amazon must pay back EUR250m of illegal state aid - European Commission

European competition authorities have demanded Amazon pay around €250m of unpaid tax to Luxembourg after finding the US retail giant's tax structure amounted to illegal state aid.

"Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon's profits were not taxed," said European Commission competition chief Margrethe Vestager.

After a three-year investigation, the European Commission ruled that a Luxembourg's tax ruling in 2003 enabled Amazon to shift the vast majority of its profits from Amazon EU, a subsidiary that is subject to tax in Luxembourg, to Amazon Europe Holding Technologies, a company which is not subject to tax.

Luxembourg let Amazon pay a royalty from the Amazon EU to Amazon Europe Holding Technologies, the EC found, which significantly reduced Amazon EU's taxable profits.

Vestager said: "Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules. This is illegal under EU State aid rules. Member states cannot give selective tax benefits to multinational groups that are not available to others."