As Europe’s second highest court dealt a blow to the bloc’s efforts to make multinational corporations pay more tax, amazon has won its fight against an EU order to pay about 250 million euros ($303 million) in back taxes to Luxembourg. Amazon had not enjoyed a selective advantage in its tax deal with the Grand Duchy. This was stated by the Luxembourg-based General Court.
The judge said that the Commission did not 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 stated that it was in line with its long-standing position that they followed all applicable laws and that Amazon received no special treatment.
The Amazon decision is a blow for European Competition Commissioner Margrethe Vestager. She is the one who aggressively used the bloc’s state aid rules to tackle sweetheart tax deals between multinationals and EU countries. Vestager has a mixed record so far in her fight against taxation deals the Commission regards as unfair. French utility Engie (ENGIE.PA) lost its appeal against an EU order to pay back taxes of 120 million euros ($145.7 million) to Luxembourg in a separate case.
Vestager has, however, successfully made Ireland, Luxembourg, the Netherlands and Belgium change their tax ruling practices, and spurred the Organisation for Economic Cooperation and Development (OECD) to aim for a global deal on how multinational companies are taxed. The OECD said that the chances of a global deal had never been higher. The European commission said Luxembourg spared Amazon from paying taxes on almost three-quarters of its profits from EU operations by allowing it to channel profits to a holding company tax-free.
The U.S. online retailer reported $8.1 billion in first quarter profits. This is a record, and it is mainly because the consumers turned to it for their shopping needs during the pandemic and businesses paid it more to warehouse and advertise their products. And the court sided with the Commission, saying the French utility had benefited from a tax advantage.