Amazon makes French tax deal as tide turns against web giants
PARIS: US online retailer Amazon said yesterday that it has settled a major tax claim in France and will start declaring all its earnings in the country in a response to building European pressure on the digital economy giants. Amazon did not reveal how much it had paid over a French claim for nearly 200 million euros ($249 million) covering the period from 2006 to 2010.
It is one of several American technology giants in the line of fire in Europe over their tax-avoidance strategies, which often sees them route their income through low-tax nations — in Amazon’s case, Luxembourg. French President Emmanuel Macron has proposed a new mechanism for taxing US tech companies that would take into account the volume of sales generated in each European country, rather than on the profits that are booked through low-tax jurisdictions.
Amazon announced a similar tax settlement deal with Italy in December, paying 100 million euros to settle an investigation into suspected tax evasion from 2011 to 2015, while also agreeing to declare its income locally.
In 2012, Amazon revealed that it had been hit with a 198-million-euro tax bill in France for back taxes, interest and penalties relating to income spread between different jurisdictions.
At the time, the company had said it disagreed with the French assessment and vowed to “vigorously” fight it. In its statement yesterday, Amazon said it had created a French subsidiary for its European operations in August 2015, “with all retail revenues, expenses, profits and taxes due now accounted for in France.” The retailer also said it had invested over 2 billion euros in France since 2010, creating more than 5,500 jobs.
‘Electroshock’ plan European officials have vowed to make the digital economy giants known as GAFA-Google, Amazon, Facebook and Apple-pay a greater share of their taxes in the countries where they earn their profits. Under current EU law, companies based outside the bloc can declare their earnings from across the 28-nation market in a single country.
That has led them to pick low-tax nations like Ireland, the Netherlands or Luxembourg-depriving other member states of revenues, even though they may account for a bigger share of the earnings.
The Organization for Economic Cooperation and Development says such rules cost governments around the world as much as $240 billion (193 billion euros) a year in lost revenue, according to a 2015 estimate.
On Sunday, EU Economic Affairs Commissioner Pierre Moscovici said he would unveil by the end of March a plan to “create a consensus and an electroshock” on taxing digital economy revenues.
“The idea is to be able to identify the activities of digital companies, so we need a range of indicators-the number of clicks, the number of IP addresses, advertising, and eventually revenues... and then we’ll find ways to tax them,” Moscovici said.