Amazon Wins EU Tax Case

Posted on May 12, 2021 by Paul Thurrott in Amazon with 11 Comments

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.

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.

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Comments (11)

11 responses to “Amazon Wins EU Tax Case”

  1. glenn8878

    Maybe they need to write better laws. These tax shelters must be outlawed.

    • Greg Green

      Legislators are amateurs when it comes to writing tax laws, it’s something they seldom do. Then corporations hire professional accountants and tax lawyers who have worked their entire adult lives to interpret the tax laws. It’s not a fair fight.

  2. scovious

    That's yet another shiesty move from Amazon. If only tech giants paid fair taxes like their customers do...

    • Elwood P Suggins

      Ya sure... like you, me, Amazon customers and everybody else don't take advantage of every nook and cranny available to us to reduce our own tax bills. The only difference being scale... instead of $10s, $100s and $1000s - Amazon deals with $1Ms, $10Ms and $100Ms.

      • Pierre Masse

        Do you place people in power to write tax law? Do you spend hundred of millions to lobby those who doesn't come from your stable? Do you pay less tax than your secretary? Do you place your money in other countries. Do you have a department full of lawyers and accountants who do just that all day long? I don't think it is just a question of scale. It's an ideology : Get everything, leave nothing.

    • Paul Thurrott

      Amazon is a publicly-traded company. Its shareholders demand that it maximize profits, and one way to do that is to take maximum advantage of the tax laws. We do that as individuals, too. If the tax laws are poorly written, it behooves them to take advantage. On the flipside, that means that countries/etc. need to make sure that's not possible. But that's not on Amazon.
  3. dftf

    Has the EU ever been successful in any of the tax cases?

    To my memory, haven't they gone-after Apple, Microsoft, Facebook and Alphabet (aka Google's parent) in the past also, and I can't recall any wins?

  4. bkkcanuck

    The courts are making the right decision. You do not change the rules and make them retroactive years before. Should they be paying more? Yes, but that is up to the legislative bodies to enact.