EU court overturns ruling ordering Amazon to pay $300 million in back taxes
In the latest setback to European Union efforts to tackle corporate tax avoidance, a court Wednesday annulled a ruling by the European Commission that a tax deal between Amazon and the Luxembourg government amounted to illegal state support.
The European Commission, the EU’s executive branch, had ordered the online retail giant in 2017 to pay about $300 million in back taxes to Luxembourg. But judges at the EU’s General Court said the commission didn’t prove “to the requisite legal standard that there was an undue reduction of the tax burden of a European subsidiary of the Amazon group.”
Amazon said it welcomed the court’s decision, which is “in line with our long-standing position that we followed all applicable laws and that Amazon received no special treatment,” the company said in a statement. “We’re pleased that the Court has made this clear, and we can continue to focus on delivering for our customers across Europe.”
The European Commission’s decision related to Luxembourg’s tax treatment of two companies in the Amazon group: Amazon EU and Amazon Europe Holding Technologies.
Margrethe Vestager, the EU official in charge of antitrust issues, argued at the time that Amazon had unfairly profited since 2003 from special low tax conditions in tiny Luxembourg, where its European headquarters are based. As a result, almost three-quarters of Amazon’s profits in the EU were not taxed, she said.
Both Luxembourg and Amazon challenged the decision in the EU’s General Court.
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The EU has taken aim at deals that companies strike with individual EU member nations eager to lure foreign multinationals in search of a place to establish their European headquarters. The practice has led to EU states competing with each other and multinationals playing them off one another.
Judges at the General Court have backed the European Commission in several cases, but the EU’s efforts to crack down on favorable tax deals suffered recent setbacks in cases involving Starbucks and Apple.
Those setbacks have earned Vestager criticism from the business community, some EU nations and members of the European Parliament.
“Today’s decision by the European Court of Justice is an embarrassment for the commission,” said Markus Ferber of the Christian Democrat group in the parliament. Vestager “would be well-advised to restrain her eagerness for catchy political headlines and instead prepare her cases more thoroughly so that they can hold up in a court of law,” he said.
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Wednesday’s ruling can be appealed to the 27-nation bloc’s highest court, the European Court of Justice.
The EU remains at odds with Amazon on other issues relating to competition. Last year, EU regulators filed antitrust charges against the e-commerce giant, accusing it of using its access to data from companies that sell products on its platform to gain an unfair advantage over them.
The Luxembourg government welcomed the General Court’s Amazon decision, adding in a statement that the ruling does not impugn in any way the country’s “commitment to transparency in tax matters and the fight against tax-avoidance practices.”
