Court rules Amazon tax deal with Luxembourg was legal in setback to EU

A European court on Wednesday annulled an earlier ruling that found a tax deal between Amazon and Luxembourg constituted illegal state support.

As The Associated Press reports, the European Union’s executive branch ordered Amazon in 2017 to pay around 250 million euros in back taxes to Luxembourg, alleging the country had granted it illegal state aid. However, the EU’s General Court ruled that the European Commission was unable to prove “to the requisite legal standard that there was an undue reduction of the tax burden of a European subsidiary of the Amazon group.”

The European Commission’s 2017 decision had to do with two of Amazon’s companies: Amazon EU and Amazon Europe Holding Technologies.

The tech giant said it welcomed the court’s decision as being “in line with our long-standing position that we followed all applicable laws and that Amazon received no special treatment.”

“We’re pleased that the Court has made this clear, and we can continue to focus on delivering for our customers across Europe,” Amazon added.

Executive Vice-President of the European Commission Margrethe Vestager said in a statement that the commission “will carefully study the judgment and reflect on possible next steps.”

“All companies should pay their fair share of tax,” Vestager said. “Tax advantages given only to selected multinational companies harm fair competition in the EU. They also deprive the public purse and European citizens of funds for much needed investments to recover from the coronavirus crisis and seize the twin transitions.”

The AP notes that the EU has targeted deals between companies and countries in the bloc seeking to lure multinational corporations to set up their European headquarters. This practice has led to countries competing with each other and large corporations pitting them against one another.

On Wednesday, the General Court also ruled that Luxembourg had granted tax advantages to the French multinational electric utility the Engie group. The AP reports that Luxembourg had been found three years ago to have allowed two Engie companies to avoid paying taxes on profits for about a decade.