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Amazon to pay more taxes in Europe under pressure from Brussels

After years of development without constraints, taking advantage of the best European tax regimes,Tax optimization of large American high-tech groups has reached such a level of efficiency that it allows US companies to pay a derisory tax compared to their volume of activity on European markets, leading to glaring inequalities compared to companies subject to the tax systems of their country.

Amazon logo. By transferring their income from major European markets to countries with advantageous tax regimes, like Ireland or Luxembourg, multinationals escape the heaviest taxes and significantly reduce their exposure to corporate tax.

This specific organization is not illegal in itself but it has become so effective that it has started to attract the attention of public authorities, justly annoyed to see big companies making hundreds of millions of euros, if not billions, of income in the major European economies for the collection in return of a few million euros in taxes.

In addition to not filling the coffers of the states concerned, tax optimization also ends up creating a competitive advantage compared to national companies subject to local taxation, the sums saved could also serve as leverage for exhaust competition and take almost total control of the markets.

Europe is investigating, major groups are adaptingEurope logo pro European investigations have been launched with regard to tax optimization and incentives granted to large American groups in exchange for their establishment in a territory, in order to determine whether preferential treatment undue payments have not been granted.

Apple in Ireland and Amazon in Luxembourg are the subject of surveys in Europe, in particular on the practice of Tax ruling (which allows companies to know their tax system in advance and implement avoidance strategies) and this focus leads multinationals to review their strategy to adapt. The Wall street journal indicates that Amazon no longer systematically redirected revenue from its German, Spanish, Italian and English subsidiaries to Luxembourg since May 1, 2015.

The device should spread quickly to other markets but will help to significantly increase the amount of tax paid on the different markets. Amazon is thus showing a sign of goodwill that could avoid heavy sanctions and encourage other groups to do the same before Europe hardens the legislation at their expense.