Amazon wins court battle against European Commission order to pay $300M to Luxembourg
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Amazon wins court battle against European Commission order to pay $300M to Luxembourg

The EU’s General Court on Wednesday annulled a European Commission decision from 2017, in which the Commission had found that a tax deal between the Luxembourg government and multinational tech company Amazon amounted to “illegal state aid.”

In 2017, Amazon was ordered by the European Commission, the EU’s politically independent executive arm, to pay approximately €250 million (USD $303 million) in back taxes to Luxembourg. The original decision was made in order to tackle corporate tax avoidance related to Luxembourg’s tax treatment of two companies in the Amazon group: Amazon EU and Amazon Europe Holding Technologies. It was argued by Margrethe Vestager, the EU official in charge of antitrust issues, that Amazon had unfairly profited from special low tax conditions since 2003 in Luxembourg, which is where its European headquarters are based. As a result of this, three-quarters of Amazon’s profits in the EU were not taxed.

Al Jazeera notes that the EU has taken aim at deals concluded between individual countries and companies used to lure foreign multinationals in search of a place to establish their EU headquarters. This practice has led to EU states competing and multinationals such as Amazon playing them against one another.

The decision was challenged by both Luxembourg and Amazon and each brought an action seeking annulment of that decision. In the judgment delivered on Wednesday, the General Court of the European Union affirmed 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.” The judges at the General Court have supported the European Commission in several cases but on Wednesday departed from this practice.

Amazon said in a press statement that it welcomed the court’s decision and that it was “in line with our long-standing position that we followed all applicable laws and that Amazon received no special treatment, we are pleased that the Court has made this clear, and we can continue to focus on delivering for our customers across Europe.”

Wednesday’s ruling can be appealed to the European Court of Justice.