EC loses tax case from Amazon over alleged state aid

October 26, 2021 by No Comments

The American technology company Amazon does not have to pay an additional assessment of 250 million euros in ‘backward’ taxes plus interest that it would have transferred too little in Europe. This was decided by the General Court of the European Union on Wednesday in a lawsuit brought by the Luxembourg government and Amazon. The European Commission had imposed the additional assessment because of alleged unfair state aid.

Amazon paid much less tax in the European Union in the period 2006 to 2014 than could reasonably be expected, the Commission ruled in October 2017. Using a 2003 tax arrangement involving a Luxembourg sales company and a tax-exempt holding company, the tech company paid no tax on three quarters of its profits in Europe for eight years.

According to European Commissioner Margrethe Vestager (Competition), Luxembourg had thus granted illegal state aid to Amazon. Therefore, that country should reclaim the lost tax money. Both Luxembourg and Amazon appealed against this and are now in favor of the judge. The tax structure was extended in 2011 and is still used today.

Lawsuit in Ireland

The European Commission lost a similar and notorious lawsuit in 2020 about tax avoidance through state aid from the also American technology company Apple. As a result, Apple does not have to pay additional tax of 13 billion euros in Ireland. Vestager appealed that ruling to the European Court of Justice. The court has not yet issued a ruling in this case.

The Commission won the appeal on Tuesday in a tax case it had brought against the French energy company Engie. According to the EU court, that company enjoyed unauthorized tax benefits in Luxembourg between 2008 and 2014 and must therefore pay an additional tax of 120 million euros in that country. Engie and Luxembourg filed the appeal in 2018.