Brussels to hit Amazon with large tax bill

Online retail giant Amazon will reportedly be slapped with a tax bill worth several hundred million euros following a lengthy EU investigation into a sweetheart tax deal with Luxembourg.

The EU’s competition commissioner Margrethe Vestager is expected to issue her decision on Wednesday following a near three-year investigation into whether Amazon’s tax affairs complied with state aid rules, according to the Financial Times, which cited sources.

The probe, which was launched in October 2014, looked at a 2003 tax agreement between Luxembourg and the retailer that saw most of Amazon’s European profits recorded in the country, but not fully taxed.

Both Amazon and the European Commission declined to comment.

It would be the latest EU regulatory decision to affect a major US firm, with Vestager putting the tax affairs of a number of high-profile targets including Amazon under the microscope in recent years.

The EU Commission last year hit US tech giant Apple with a 13 billion euro ($A20 billion) tax bill in the wake of an investigation which found that Apple paid 50 euro in tax for every one million of profit made outside the US in 2014.

The government and Apple are both appealing against the decision.

McDonald’s is also facing fire from EU antitrust officials who are investigating claims that the fast food giant avoided more than 1 billion euro in tax through the use of a royalties loophole in Luxembourg.

When it launched its investigation in 2015, the European Commission said the European arm of McDonald’s had paid virtually no corporation tax in Luxembourg or the US since 2009, despite making significant profits in the division.

McDonald’s subsequently announced this past December that it was moving its non-US tax base to the UK, as it battled EU regulators over its tax affairs.