The EU General Court this morning overruled a 2017 judgment that ordered Amazon to pay $300 million in unpaid taxes. The European Commission (EC) had charged that Amazon received special treatment from the Luxembourg tax authority and paid fewer taxes than it should have over a several-year period.
“[The EC] 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 said in their ruling for Amazon.
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Amazon had been funneling its EU-based revenues through an entity called Amazon EU SARL which then paid drastically reduced royalties to an untaxed Luxembourg-based parent company called Amazon Europe Holding Technologies SCS, reducing its taxable income from the bloc. Amazon has since changed the way it conducts business in the EU.
This is the second major legal defeat for European Union competition chief Margrethe Vestager, who is actively trying to curb the dominance of the biggest U.S. technology firms for a variety of antitrust reasons. Last year, the EU General Court overthrew a $15 billion tax order against Apple in Ireland on appeal.
“[This decision] is in line with our long-standing position that we followed all applicable laws and that Amazon received no special treatment,” an Amazon statement reads.
“We will carefully study the judgment and reflect on possible next steps,” Ms. Vestager said. Among those steps, of course, is an appeal of this ruling. Doing so makes sense: The EC has several tax-related cases pending against U.S. firms like Nike and Starbucks, as well as Fiat Chrysler, which is owned by a multinational firm.
But the EC could also pursue new tax laws that will explicitly tax big technology firms at a higher rate. “We need to seize the momentum to progress towards fair taxation at all levels,” Ms. Vestager said this morning.