The European Commission has referred Ireland to the European Court of Justice for failing to collect a €13 billion (15.3 billion) tax demand levied against Apple Inc. (AAPL - Get Report) last year and ordered Amazon (AMZN - Get Report) to pay €250 million in benefits to Luxembourg in the latest crackdown on the global operations of U.S. tech firms.
"Ireland has to recover up to 13 billion euros in illegal State aid from Apple," EU Competition Commissioner Margrethe Vestager said Wednesday. "However, more than one year after the Commission adopted this decision, Ireland has still not recovered the money, also not in part."
"We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist," she added. "But Member States need to make sufficient progress to restore competition. That is why we have today decided to refer Ireland to the EU Court for failing to implement our decision."
Know it may be difficult, but more that 1 year after Apple decision, tax benefits not recovered by Ireland. We ask EU court to look into it.— Margrethe Vestager (@vestager) October 4, 2017
Ireland's Finance Ministry called the Commission's decision "extremely disappointing" and said that while it has never accepted the ruling, it has nonetheless "committed significant resources ... to ensuring that recovery of the alleged Apple state aid takes place without delay."
The Commission also said that Amazon must repay €250 million to Luxembourg after determining that the Duchy provided "illegal tax benefits" to the world's biggest online retailer.
"As a result, almost three quarters of Amazon's profits were not taxed," Vestager said. "In other words, 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."
.@amazon tax benefits in Luxembourg are illegal under our common European rules on state aid. Amazon to repay benefits worth around €250 mio— Margrethe Vestager (@vestager) October 4, 2017
The Commission said Amazon was able to shift "the vast majority of its profits" from Amazon EU to holding company known as Amazon Europe Holding Technologies that lowered the group's European tax bill by as much as 75%.
"We believe that Amazon did not receive any special treatment from Luxembourg and that we paid tax in full accordance with both Luxembourg and international tax law," Amazon said.
Luxembourg's Finance Ministry said in a statement that it was "studying" the decision, but noted that, as "Amazon has been taxed in accordance with the tax rules applicable at the relevant time, Luxembourg considers that the company has not been granted incompatible State aid."
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