The European Commission on Wednesday confirmed plans to take Ireland to court in order to force the country to recover €13bn in what it considers illegal tax benefits from Apple, while also accusing Luxembourg of giving Amazon preferential treatment.

Brussels’s bid to force Amazon and Apple to pay back taxes in Europe risks reigniting transatlantic tensions in the latest steps in the EU crackdown on tax avoidance by big multinationals.

Amazon faces a bill of around €250m for back taxes in Luxembourg and Brussels will ask the European court of Justice to force Ireland to collect €13bn in taxes from Apple.

Margrethe Vestager, European competition commissioner, said that companies need to pay their fair share of tax, something the vast majority of companies do.

After a nearly three-year long investigation, the commission decided that the US online retailer benefited from a sweetheart tax deal that granted it almost a decade of illegal state support from Luxembourg, the hub for its European operations.

“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed, “ said Margrethe Vestager, European competition commissioner. “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.”

The move comes 14 months after the commissioner ruled Apple’s Irish tax arrangements granted it an illegal advantage and ordered Ireland to recover a record €13bn in back taxes. Tired of waiting for payment of that bill, Ms Vestager decided on Wednesday to refer Ireland to the European Court of Justice for failing to implement its 2016 decision.

The Apple decision prompted a fierce political backlash from Washington and Wednesday’s commission’s recovery order could rekindle tensions over Europe’s tax clampdown, just as Washington considers tax reforms that encourage US multinationals to repatriate foreign profits held offshore.

Ms Vestager ruled that the 2003 tax ruling underpinning Amazon’s European business structure allegedly permitted it to improperly cut taxable European profits by paying intergroup royalties into a non-taxable partnership. Luxembourg and Amazon have long denied any wrongdoing and could appeal the case.

Amazon said: “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. We will study the commission’s ruling and consider our legal options, including an appeal.”.

Dublin responded by saying the commissioner’s action was “wholly unncessary”, adding that it has never accepted the commission’s analysis in the Apple ruling.

In a statement, the Irish government said it was fully committed to recovering the “alleged Apple state aid” and had committed significant resources to ensuring that was achieved.

“Ireland fully respects the rule of law in the EU,” it said. “That is why it is extremely disappointing that the Commission has taken action at this time against Ireland.”

The statement said Irish officials and experts have been engaged in intensive work to ensure that Dublin complies with all its recovery obligations as soon as possible, and had been in constant contact with the commission and Apple for more than a year.

“It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large scale recovery amount. Ireland has made significant progress on this complex issue and is close to the establishment of an escrow fund, in compliance with all relevant Irish constitutional and European Union law,” it said.

“The work on the establishment of the escrow fund to deal with the unprecedented recovery amount will continue, notwithstanding the fact that Commission has taken this wholly unnecessary step.”

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