Commission Decision (EU) 2018/859 of 4 October 2017 on State aid SA.38944 (2014/C... (32018D0859)
Commission Decision (EU) 2018/859 of 4 October 2017 on State aid SA.38944 (2014/C) (ex 2014/NN) implemented by Luxembourg to Amazon (notified under document C(2017) 6740) (Text with EEA relevance.)
- COMMISSION DECISION (EU) 2018/859
- of 4 October 2017
- on State aid SA.38944 (2014/C) (ex 2014/NN) implemented by Luxembourg to Amazon
- (notified under document C(2017) 6740)
- (Only the French text is authentic)
- (Text with EEA relevance)
- 1.
- PROCEDURE
- 2.
- FACTUAL AND LEGAL BACKGROUND
- 2.1.
- DESCRIPTION OF THE BENEFICIARY OF THE CONTESTED TAX RULING
- 2.1.1. THE AMAZON GROUP
- 2.1.2. AMAZON'S EUROPEAN OPERATIONS
- Figure 1
- Structure of Amazon's European Entities 2006-2014
- 2.1.2.1.
- LuxSCS
- 2.1.2.2.
- LuxOpCo and its subsidiaries
- 2.1.2.3.
- The License Agreement
- 2.2.
- THE CONTESTED MEASURE
- 2.2.1. THE CONTESTED TAX RULING
- 2.2.2. THE LETTER OF 31 OCTOBER 2003
- 2.2.3. THE LETTER OF 23 OCTOBER 2003
- 2.2.4. THE TRANSFER PRICING REPORT
- 2.2.4.1.
- Functional analysis
- 2.2.4.2.
- Selection of the most appropriate transfer pricing method
- 2.2.4.3.
- Transfer pricing assessment based on the CUP method
- 2.2.4.4.
- Transfer pricing assessment based on the residual profit split method
- 2.2.4.5.
- Reconciliation of the two transfer pricing arrangements
- 2.2.5. CONSEQUENCES OF THE CONTESTED TAX RULING
- Figure 2
- Structure of Amazon's European Entities 2006-2014 incl. arrangement for royalty payment
- 2.3.
- ADDITIONAL INFORMATION SUBMITTED IN THE COURSE OF THE FORMAL INVESTIGATION
- 2.3.1. INFORMATION ON THE EUROPEAN ONLINE RETAIL MARKET
- 2.3.2. INFORMATION ON AMAZON'S BUSINESS MODEL
- 2.3.2.1.
- The ‘three pillars’ of Amazon's retail business model
- 2.3.2.2.
- Online marketing efforts
- 2.3.2.3.
- Technology
- 2.3.3. ADDITIONAL INFORMATION ON LUXOPCO
- 2.3.3.1.
- LuxOpCo's organisational structure
- Figure 3
- LuxOpCo organigram as per end 2013
- 2.3.3.2.
- Financial information on LuxOpCo
- 2.3.3.3.
- The relationship between LuxOpCo and the EU Local Affiliates
- 2.3.4. ADDITIONAL INFORMATION ON LUXSCS
- 2.3.4.1.
- Financial information on LuxSCS
- 2.3.4.2.
- Additional information on the Buy-In Agreement and the CSA
- 2.3.4.3.
- Other costs incurred by LuxSCS in relation to the Intangibles
- 2.3.4.4.
- Information on the US Tax Court proceedings
- 2.3.4.5.
- Buy-in payments for other IP rights acquired by LuxSCS
- 2.3.4.6.
- Written resolutions of LuxSCS's sole manager of and minutes of LuxSCS general meetings
- 2.3.5. INFORMATION ON IP LICENSING AGREEMENTS ENTERED INTO BETWEEN AMAZON GROUP ENTITIES AND UNRELATED ENTITIES
- 2.3.5.1.
- The M.com Agreements
- Table 15
- Variable fees paid by [A]
- (243)
- 2.3.5.2.
- Other IP license agreements between the Amazon group and non-related entities
- 2.3.6. DESCRIPTION OF AMAZON'S NEW CORPORATE AND TAX STRUCTURE IN LUXEMBOURG AS CONFIRMED BY THE 2014 TAX RULING
- 2.4.
- DESCRIPTION OF THE RELEVANT NATIONAL LEGAL FRAMEWORK
- 2.5.
- GUIDANCE ON TRANSFER PRICING
- 2.5.1. THE OECD FRAMEWORK ON TRANSFER PRICING
- 2.5.2. THE ARM'S LENGTH PRINCIPLE FOR INTERNATIONAL TAX PURPOSES
- 2.5.3. THE OECD TRANSFER PRICING METHODS
- 2.5.3.1.
- The arm's length range
- 2.5.3.2.
- Special considerations on the application of the arm's length principle for intangible property
- 2.5.3.3.
- Special considerations on the application of the arm's length principle to shareholder activities and low value adding intra-group services
- 2.6.
- DESCRIPTION OF THE MAIN ACCOUNTING AND FINANCIAL TERMS USED IN THE DECISION
- Table 17
- Simplified profit and loss account
- 3.
- GROUNDS FOR INITIATING THE PROCEDURE
- 4.
- COMMENTS FROM LUXEMBOURG
- 4.1.
- LUXEMBOURG'S COMMENTS ON ALLEGED PROCEDURAL SHORTCOMINGS
- 4.2.
- LUXEMBOURG'S COMMENTS ON ALLEGED LEGAL ERRORS IN THE OPENING DECISION
- 4.3.
- LUXEMBOURG'S COMMENTS ON THE DOUBTS EXPRESSED IN THE OPENING DECISION
- 4.4.
- LUXEMBOURG'S COMMENTS ON M.COM AGREEMENTS, THE INTRAGROUP LICENSE AGREEMENTS, IP LICENSE AGREEMENTS AND OTHER INFORMATION
- 4.5.
- LUXEMBOURG'S COMMENTS ON AMAZON'S SUBMISSION OF DOCUMENTS RELATED TO THE US TAX COURT PROCEDURE
- 5.
- COMMENTS FROM INTERESTED PARTIES
- 5.1.
- COMMENTS FROM AMAZON
- 5.1.1. AMAZON'S COMMENTS ON ALLEGED LEGAL ERRORS
- 5.1.2. AMAZON'S COMMENTS ON THE DOUBTS EXPRESSED IN THE OPENING DECISION
- 5.2.
- EPICENTER
- 5.3.
- COMPUTER & COMMUNICATIONS INDUSTRY ASSOCIATION
- 5.4.
- ATOZ
- 5.5.
- FEDIL
- 5.6.
- OXFAM
- 5.7.
- THE BOOKSELLERS ASSOCIATION OF THE UNITED KINGDOM & IRELAND LTD
- 5.8.
- THE EUROPEAN AND INTERNATIONAL BOOKSELLER FEDERATION, LE SYNDICAT DE LA LIBRAIRIE FRANÇAISE, THE FEDERATION OF EUROPEAN PUBLISHERS AND LE SYNDICAT DES DISTRIBUTEURS DE LOISIRS CULTURELS
- 5.9.
- BUNDESARBEITSKAMMER
- 6.
- INFORMATION SUBMITTED BY COMPANY X
- 7.
- COMMENTS FROM LUXEMBOURG ON THIRD PARTIES' COMMENTS AND ON INFORMATION SUBMITTED BY COMPANY X
- 7.1.
- LUXEMBOURG'S COMMENTS ON THIRD PARTIES' COMMENTS
- 7.2.
- LUXEMBOURG'S COMMENTS ON COMPANY X'S SUBMISSION
- 8.
- FURTHER SUBMISSIONS BY AMAZON
- 8.1.
- SUBMISSIONS ON THE REMUNERATION FOR LUXSCS AND LUXOPCO BEING AT ARM'S LENGTH
- 8.2.
- SUBMISSION ON INFORMATION SUBMITTED BY COMPANY X
- 8.3.
- SUBMISSIONS ON AMAZON'S TECHNOLOGY-CENTRIC E-TAILING BUSINESS
- 8.4.
- SUBMISSIONS ON CRITICAL THREATS FOR AMAZON'S EUROPEAN OPERATIONS
- 8.5.
- AMAZON'S SUBMISSIONS OF 29 MAY 2017
- 9.
- ASSESSMENT OF THE CONTESTED MEASURE
- 9.1.
- EXISTENCE OF AID
- 9.2.
- ADVANTAGE
- 9.2.1. PRIMARY FINDING OF AN ECONOMIC ADVANTAGE
- 9.2.1.1.
- Functional analysis of LuxSCS
- 9.2.1.1.1.
- Functions performed by LuxSCS
- 9.2.1.1.2.
- Assets used by LuxSCS
- 9.2.1.1.3.
- Risks assumed by LuxSCS
- 9.2.1.1.4.
- Conclusion on the functional analysis of LuxSCS
- 9.2.1.2.
- Functional analysis of LuxOpCo
- 9.2.1.2.1.
- Functions performed by LuxOpCo in relation to the Intangibles
- (a) The IP Steering Committee
- (b) Technology
- (c) Customer data
- (d) Trademark
- 9.2.1.2.2.
- Functions performed by LuxOpCo in the operation of Amazon's European retail and service business
- (a) Selection
- (b) Price
- (c) Convenience
- 9.2.1.2.3.
- Assets used by LuxOpCo
- 9.2.1.2.4.
- Risks assumed by LuxOpCo
- 9.2.1.2.5.
- Conclusion on the functional analysis of LuxOpCo
- 9.2.1.3.
- The choice of the most appropriate transfer pricing method
- 9.2.1.3.1.
- The CUP method
- 9.2.1.3.2.
- The profit split method and the TNMM
- 9.2.1.4.
- The application of the TNMM to the present case
- 9.2.1.4.1.
- The tested party should be LuxSCS
- 9.2.1.4.2.
- The profit level indicator
- 9.2.1.4.3.
- The determination of an appropriate mark-up
- 9.2.1.5.
- Conclusion on the primary finding of an economic advantage
- 9.2.2. SUBSIDIARY FINDING OF AN ECONOMIC ADVANTAGE
- 9.2.2.1.
- LuxOpCo was incorrectly considered to perform solely ‘routine’ management functions
- 9.2.2.2.
- Inappropriate choice of operating expenses as profit level indicator
- 9.2.2.3.
- Inappropriate inclusion of a ceiling in the transfer pricing arrangement
- 9.2.2.4.
- Conclusion on the subsidiary finding of an economic advantage
- 9.3.
- SELECTIVITY
- 9.3.1. PRIMARY FINDING OF SELECTIVITY
- 9.3.2. SUBSIDIARY FINDINGS OF SELECTIVITY
- 9.3.2.1.
- Favourable treatment as compared to all corporate taxpayers
- 9.3.2.2.
- Favourable treatment in comparison with corporate taxpayers belonging to a multinational corporate group
- 9.3.3. LACK OF JUSTIFICATION
- 9.3.4. CONCLUSION ON SELECTIVITY
- 9.4.
- CONCLUSION ON THE EXISTENCE OF AID
- 9.5.
- BENEFICIARY OF THE AID
- 9.6.
- COMPATIBILITY OF THE AID
- 9.7.
- UNLAWFULNESS OF THE AID
- 10.
- RECOVERY
- 10.1.
- THE RECOVERY OBLIGATION
- 10.2.
- NEW AID
- 10.3.
- NO GENERAL PRINCIPLE OF LAW PREVENTS RECOVERY
- 10.4.
- METHODOLOGY FOR RECOVERY
- 10.5.
- ENTITY FROM WHOM THE AID IS TO BE RECOVERED
- 11.
- EVIDENCE RELIED UPON BY THE COMMISSION FOR A FINDING OF AID
- 12.
- CONCLUSION
- Article 1
- Article 2
- Article 3
- Article 4
- Article 5
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