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European Union officials contend that a Luxembourg ruling from 2003 could represent an improper tax shelter and thus require Amazon to pay back taxes.

Declan McCullagh/CNET

Amazon is under investigation over a deal with the Luxembourg government that has allegedly allowed to company to pay less in taxes to other European countries.

The European Union's European Commission on Tuesday launched an "in-depth investigation" into Amazon and Luxembourg over a "tax ruling" from 2003.

"It is well known that some multinationals are using tax planning strategies...to reduce their global tax burden, eroding tax bases in EU Member States," the European Commission wrote in a statement on Tuesday. "We are looking at whether selective tax advantages have been granted to a particular company."

The investigation is nearly identical to the one impacting Apple in Ireland. In that case, the European Union is investigating whether a special deal between Apple and Ireland's government allows the company to sidestep much of its tax liability. The country's corporate tax rate is 12.5 percent, but Apple pays less than 2 percent in taxes in Ireland. If the European Union decides that this is improper, then Apple could be forced to pay billions of euros in unpaid taxes stretching back 10 years.

A similar scenario could play out with Amazon, if the European Union finds that the agreement between Luxembourg and the e-commerce giant allows the company to safeguard profits and improperly limit tax liability.

"The ruling we are looking at concerns Amazon's subsidiary in Luxembourg, which records most of the group's European profits," the Commission wrote. "This company pays a royalty to another entity [that is] based in Luxembourg but not subject to corporate taxation in Luxembourg. Today we observe that through this mechanism most European profits of Amazon are recorded in Luxembourg but are not taxed there."

The Commission added that the royalty reducing Amazon's tax liability "might not be in line with market conditions" and that "Luxembourg's tax authorities agreed to limit the proportion of Amazon's turnover that is being taxed in Luxembourg whatever the profit that Amazon is making."

If it does find that the deal is improper, the company could face a significant bills for back taxes.

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Amazon becomes latest EU target in tax probe

File photo of European Union's incoming boss Jean-Claude Juncker. (Agence France-Presse)

Lawmakers in Brussels have raised doubts over key members of the European Commission, the EU's executive arm for the next five years, including the British, Spanish, Hungarian and Slovenian nominees.

Juncker was in talks with senior parliamentary figures to cut a deal which could see him change some portfolios, or even drop one or more members, in order to push the team by the deadline of later this month, officials said.

His spokeswoman Natasha Bertaud said he was "happy" that "certain obstacles" were out of the way but would not comment on whether Juncker was prepared to make any compromises.

"The relevant committees are meeting tonight to discuss their assessment, and Mr. Juncker will then meet with the European Parliament leaders to discuss the overall assessment," she said.

The row stems from a power struggle between an increasingly assertive parliament and the European Commission, as well as from a split between conservatives and socialists in parliament itself.

The European Parliament can ask for European Commission candidates to be changed or be assigned new portfolios, as it did in 2004 and 2009.

It will also vote to approve or throw out the full Juncker team line-up on October 22.

On Tuesday, Britain's candidate Jonathan Hill faced further questions over his suitability for the role of financial services commissioner after being summoned for an unprecedented second hearing by parliament's ecomomics committee.

"I've had to overcome some suspicions about being a Brit, especially about being a Brit in this portfolio,' he said, referring to doubts about whether he would be biased towards Britain's huge financial services industry.

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EU's Jean-Claude Juncker Faces Pressure to Reshuffle Team

VERA JOUROVA, justice, consumers and gender equality European Union commissioner-designate, has told the EU that the current Safe Harbour agreement with the US is hanging in the balance.

Jourova said that a suspension of the arrangement is a distinct possibility, according to a report on Reuters that has access to her written answers.

"Suspension is certainly an option on the table for me," she said. "But we are not yet there."

The Safe Harbour arrangement has been around since the start of this century and is designed to provide securities for people whose data may be moving between territories.

This is OK locally, but since PRISM and all that Europeans have struggled to trust the US, its companies, its security policies and its government. The EU has asked the US to keep its national security data requests to a fair and not too intrusive minimum.

"Allow me to give this another push and to continue working in a constructive spirit with the US building on the progress made so far, while insisting that a higher level of ambition is shown and must materialise in practice," added Jourova in her answers.

According to a separate report on the Euractiv news site, Jourova is not the only person to be making such noises.

The report says that the commissioner-designate for the Digital Internal Market, Andrus Ansip, who has wide support in the European Parliament, wants tighter controls on data sharing, and a lot more trust in the US.

"As a liberal, I believe in personal rights. We must protect everyone's privacy. Data protection will be an important cornerstone of the Digital Internal Market. The citizens must have trust in this project," he said.

"Safe Harbour is not secure. The agreement has yet to live up to its name. If the US government does not make a clear statement, we must consider suspending the agreement."

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European Union may halt the US Safe Harbour deal

Getty Images French President Franois Hollande.

BRUSSELSThe European Union is preparing to reject Frances 2015 budget, according to European officials, setting up a clash that would be the biggest test yet of new powers for Brussels that were designed to prevent a repeat of the eurozones sovereign-debt crisis.

French Finance Minister Michel Sapin said last month that his country would run a budget deficit of 4.3% of gross domestic product next yearfar from the 3% deficit it had previously pledged. Stripping out the effects of the weak economy, the governments planned cost cuts would amount to just 0.2% of GDP, falling short of cuts worth 0.8% that it had agreed upon with Brussels.

That could put Frances budget in serious noncompliance with tightened EU deficit rules, likely leading the commission to send it back to Paris for revisions, European officials said. So far, the French government has said it wont take any extra belt-tightening measures beyond what it proposed in the spring, indicating it is ready to risk a public clash with Brussels.

People are ready to let the big boys in Brussels reject the budget, a European official said.

The conflict with France could be joined by a budget fight with Italy, which has also said that it will miss budget targets. Italy has more leeway because its past budgets have run lower deficits than Frances, but a senior EU official called a decision about whether to confront Italy borderline.

An expanded version of this report appears at WSJ.com.

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The Wall Street Journal: EU preparing to reject Frances budget for 2015

Slovakia could seek compensation from the European Union on potential losses from replacing what it says is a shortfall in deliveries requested from its main supplier Russia over the past month, an economy ministry spokeswoman said on Monday.

Poland, Slovakia, Austria and Hungary have all reported that Russia's state-controlled Gazprom has sent smaller deliveries than requested after the European Union began sending gas to Ukraine.

Slovakia, a major transit point for Russian gas through Ukraine to the EU, last week said that state importer SPP's flows from Russia were down more than 50% on its requested deliveries.

Gazprom, meanwhile, has said that its deliveries to the central European country had been stable in the preceding 10 days and that it was meeting its contractual obligations.

Slovakia has not calculated whether it has incurred losses as a result of recent deals to secure alternative gas supplies, but the economy ministry said that European Energy Commissioner Gnther Oettinger had confirmed that the country could be in line for compensation.

"The question will be raised at the nearest European Council meeting whether there is the will to compensate," Miriam Ziakova, an economy ministry spokeswoman, said in a telephone interview.

"Commissioner Oettinger confirmed Slovakia should get compensation if it calculates its losses."

Russia has halted gas flows to Ukraine three times in the past decade, in 2006, 2009 and since June this year.

Gas for the EU, via Ukraine, has continued to flow despite the pricing dispute between Moscow and Kiev, but analysts have said that the lower than expected deliveries across the region mark a clear warning that Russia would be prepared to retaliate this winter should Brussels impose further sanctions on Moscow over its intervention in Ukraine.

Slovak Prime Minister Robert Fico announced last week that SPP had concluded a five-year deal with E.ON Global Commodities to supply up to 2 million cubic metres of gas per day via Austria when needed.

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Slovakia looks for EU compensation over reduced Russian gas deliveries