Amazon.com Inc. might have to pay back taxes to the U.S. in the wake of the EU's own call for roughly €250 million in unpaid taxes, the Financial Times reported Oct. 9.
Citing unnamed EU officials, the FT reported that half of the profits in a holding company operated by Amazon in Luxembourg, totaling about €1 billion, could be taxable in the U.S. At the U.S. corporate tax rate of 35%, the FT estimated that Amazon could end up paying roughly €300 million more to the U.S. government on profit made through the holding company.
Discussion of potential taxes Amazon owes in the U.S. comes less than a week after the European Commission found that the e-commerce company allegedly reduced what it owed the EU in taxes by paying royalties to a non-taxable holding company based in Luxembourg. Amazon allegedly used the holding company arrangement to reduce its taxes for nearly a decade, the commission charged.
Both Luxembourg and Amazon deny that they broke tax law with the arrangement, and Amazon has said it may pursue an appeal of the commission's ruling, the FT reported.