The EU commission is demanding huge backpayments from Apple and Amazon. But there’s still not enough progress on getting the system right

The EU’s faltering progress towards a common system of taxing the huge revenues of the new digital giants lurched forward this morning as Margrethe Vestager, the EU commissioner in charge of competition, declared that Amazon had received unfair state aid from Luxembourg through its tax arrangements, and demanded that it pay €250m (£222m) in back taxes. At the same time, Ms Verstager announced that the European commission would haul Ireland up before the European court of justice for its failure to demand €13bn of unpaid tax from Apple, identified in an earlier investigation.

The two events illustrate the gulf between the commission, together with some of the EU’s largest economies, and smaller members such as Ireland, Luxembourg and the Baltic state of Estonia, which hosted a summit on the digital economy last week. Both Ireland and Luxembourg defend their tax arrangements. Ireland in particular welcomes the thousands of good jobs that the tech giants bring and has no desire to find ways of extracting more tax from them in case it drives them away. The Irish government also insists that taxation is a sovereign matter, not an arena for EU interference.

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