Amazon wins $ 303 million legal battle over EU tax campaign
BRUSSELS, Belgium: In a setback to competition chief Margrethe Vestager’s campaign against preferential deals, Amazon has won its fight against an EU order to pay around $ 303 million in back taxes in Luxembourg.
The bloc has failed to demonstrate that Luxembourg granted special treatment to the US online retailer in violation of state aid rules, the EU General Court ruled on May 12.
The move follows Vestager’s historic loss to Apple last year, which challenged an order directing it to pay $ 15 billion in Irish tax arrears.
Amazon and Apple have both been targeted by Vestager as part of a crusade to eliminate tax deals used by EU states, including Luxembourg and the Netherlands, to attract large companies.
“The Commission has not proven, in accordance with the required legal standard, that there is an undue reduction in the tax burden of a European subsidiary of the Amazon group,” said the European judges based in Luxembourg.
Amazon, in a statement, welcomed the move, saying it was in line with “our long-standing position that we follow all applicable laws and that Amazon receives no special treatment.”
Vestager said she would review the decision before deciding to appeal to the highest European court.
However, Vestager is unlikely to stop his campaign, said Ioannis Kokkoris, professor of competition law and economics at London-based Queen Mary University of London.
On Wednesday, in another case, French public utility Engie lost its appeal against an EU order to repay 120 million euros to Luxembourg, but the focus was on the Amazon decision, which has been criticized by groups campaigning for a tax increase. multinationals.
“Today’s decision is a big blow,” said Chiara Putaturo, a tax expert at Oxfam EU. “This again shows that case-by-case investigations do not solve large-scale tax evasion.”
Like Oxfam, EU lawmakers have said there is a need for a systematic approach and urged the bloc to support US President Joe Biden’s call for a minimum tax rate of 21% on multinationals.
“Such a minimum tax rate would allow member states to recover lost tax revenue from Amazon in the future. It would end Luxembourg’s business model as a tax haven,” said EU lawmaker Sven Giegold.
“At the same time, public country-by-country reports should be introduced as soon as possible. Then large companies will have to disclose their profits and taxes paid by country,” Giegold said.
Vestager’s success in getting Belgium, Ireland, Luxembourg and the Netherlands to change their tax practices helped spur efforts towards a global deal.
In its 2017 decision, overturned on Wednesday, the European Commission said Luxembourg had saved Amazon from paying taxes on nearly three-quarters of its profits from EU operations by allowing it to channel profits into franchise operations. tax towards a holding company.