INHALT

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