EU court throws out Amazon’s €250m tax bill in Luxembourg

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Amazon won its appeal against an EU ruling that it owed €250m in taxes in Luxembourg.

The EU’s general court ruled in favour of the e-commerce giant, which was appealing a European Commission decision that claimed it was awarded favourable treatment in Luxembourg, where its EU base is.

The case has its roots in the LuxLeaks scandal of 2014 where details on tax dealings between Luxembourg and hundreds of companies were made public.

Led by competition commissioner Margrethe Vestager in 2017, the EU’s case accused Amazon of cutting an illegal deal with the Grand Duchy to drastically lower its tax bill.

In her initial decision, Vestager said that three-quarters of Amazon’s profits went untaxed in Luxembourg.

However the ruling in the appeal found that there was no unwarranted conditions afforded by tax authorities to Amazon.

“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,” the judge said.

Today’s ruling is a major blow to Vestager and her crusade against tax avoidance and sweetheart tax deals in the EU. Despite some early victories, the commissioner has had the tables turned in a few notable appeals.

Last year, Apple won an appeal against the European Commission’s ruling that the iPhone maker owed €13bn in taxes to Ireland. The European Commission is currently appealing that decision. Also last year, Starbucks won an appeal over its tax affairs in the Netherlands.

However today in a separate ruling, the court ruled against the French energy firm Engie, ordering it to pay €120m in taxes – another Vestager-led probe – also in Luxembourg. Vestager has open investigations into Nike and Ikea in the Netherlands.

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