The Court of Justice of the European Union (CJEU) ruled in favor of online commerce giant Amazon on Thursday in a dispute with Brussels over controversial tax rebates in Luxembourg amounting to 250 million euros. The court, which ruled in final instance, rejected an appeal from the European Commission against a court decision announced in May 2021. It confirmed that the American group would not be required to reimburse the tax advantages granted by the Grand Duchy, which were considered illegal state aid by the European executive. “We welcome the Court’s judgment, which confirms that Amazon complied with all applicable laws and did not benefit from any preferential treatment,” the company immediately reacted in a press release. The NGO Oxfam, on the other hand, denounced “an early Christmas gift” given to the American group. “The EU must propose real tax reforms,” said Chiara Putaturo, tax expert for Oxfam. She denounced “tax havens” which, within the European Union, “allow companies to escape their obligations”.
In October 2017, after three years of investigation, the Commission demanded that Amazon reimburse Luxembourg 250 million euros in “undue tax advantages”. This decision was part of a campaign against the tax practices of Silicon Valley giants accused of trying to avoid taxes in Europe.
Brussels contested the legality of a tax agreement signed in 2003 and renewed in 2011 between the e-commerce giant and the Grand Duchy, where Amazon’s European headquarters is located. This agreement allowed the American company to avoid tax on three quarters of the profits made on the continent.
Also readTaxation in Luxembourg: European justice confirms Amazon’s victory against the EU
Seized of an appeal from Luxembourg and Amazon, the EU court ruled in May 2021 that the existence of an “advantage” granted by the Grand Duchy, comparable to State aid, does not had not been demonstrated. The court therefore annulled Brussels’ decision to demand reimbursement. The European Commission then filed an appeal, which was therefore rejected on Thursday. “The Commission has not established that the tax ruling granted to Amazon by Luxembourg was State aid incompatible with the internal market,” justified the Court of Justice in a press release.
According to Amazon, this tax system used from 2006 is no longer in force, after having expired in 2014. The CJEU’s judgment marks another scathing defeat for Brussels. At the beginning of December, the Court had already ruled in favor of the French energy company Engie in a dispute over tax rebates in Luxembourg for an amount of 120 million euros. In a dispute similar to that of Amazon, it annulled the Commission’s decision to consider these advantages granted to Engie as illegal state aid.
Last year, the car manufacturer Fiat (Stellantis group) obtained from the CJEU the annulment of a decision from Brussels which required it to reimburse 30 million euros in tax benefits to Luxembourg. The Commission also lost to Apple and Starbucks in other tax disputes in Ireland and the Netherlands. Apple’s victory at first instance, however, has recently been called into question. In a non-binding opinion but generally followed by the judges, the Advocate General of the CJEU recommended in November that this dispute which for seven years has pitted the iPhone manufacturer against the European Commission over 13 billion euros be retried. euros in tax arrears in Ireland.
