BRUSSELS--European Union regulators opened a formal probe into Amazon.com Inc.'s tax arrangements in Luxembourg, snaring another major U.S. company in a high-profile investigation that has already spread to Apple Inc. and Starbucks Corp.

The European Commission, the region's antitrust authority, said it is concerned that a 2003 tax deal granted by Luxembourg's tax authorities to Amazon may amount to illegal state subsidies for the U.S. company. The commission could ask Luxembourg to recover from Amazon any taxes that it considers unpaid.

In a sign that the tax probes could spread much wider, the commission said Luxembourg had provided it in August with "information on a number of cases" it had requested as part of the same investigation, including Amazon.

The 2003 tax ruling in Luxembourg, which applies to Amazon's local subsidiary Amazon EU Sarl, "could underestimate the taxable profits" of the unit, which records most of Amazon's European profits, the commission said.

That would "grant an economic advantage to Amazon by allowing the group to pay less tax than other companies whose profits are allocated in line with market terms," the regulator said.

The EU's rules on state aid prohibit governments from providing selective advantages to individual companies, to ensure that companies across the 28-nation bloc compete fairly.

"It is only fair that subsidiaries of multinational companies pay their share of taxes and do not receive preferential treatment which could amount to hidden subsidies," the EU's antitrust chief, Joaquín Almunia, said in a statement.

The new investigation comes hot on the heels of three investigations opened in June into generous tax deals granted to Apple in Ireland, Fiat Finance and Trade in Luxembourg and Starbucks in the Netherlands. Fresh details of the Apple and Fiat probes emerged last week.

European authorities are seeking to clamp down on tax avoidance by multinationals in the wake of the region's financial crisis, which has forced painful belt-tightening on citizens and governments across the bloc.

At issue are so-called transfer-pricing arrangements, under which companies can redistribute profit within a group by charging for goods or services sold by one subsidiary to another, typically located in different countries. Experts say companies can use transfer pricing to minimize their tax bills.

While not illegal, such arrangements could violate EU rules if tax authorities allowed specific companies to charge prices internally that didn't reflect market conditions,

Write to Tom Fairless at tom.fairless@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Starbucks (NASDAQ:SBUX)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Starbucks Charts.
Starbucks (NASDAQ:SBUX)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Starbucks Charts.