The European Commission has ruled that Luxembourg granted undue tax benefits to Amazon of around €250m. This is illegal under EU state aid rules because it allowed Amazon to pay substantially less tax than other businesses. Luxembourg must now recover the illegal aid.

After an in-depth investigation launched in October 2014, the commission has concluded that a tax ruling issued by Luxembourg in 2003, and prolonged in 2011, lowered the tax paid by Amazon in Luxembourg without any valid justification.

It enabled the retailer to shift most of its profits from an Amazon group company subject to tax in Luxembourg (Amazon EU) to one that is not (Amazon Europe Holding Technologies). In particular, the ruling endorsed the …