The world’s most prominent online merchant Amazon has not taken advantage of unauthorized tax breaks in Luxembourg. The General Court of the European Union ruled that on Wednesday.
In 2017, the European Commission wrongly instructed the Luxembourg government to claim 250 million euros in ‘back pay’ tax plus interest from Amazon, the judges said. Amazon and the Luxembourg government had taken the EU General Court against the decision of the day-to-day EU administration.
In 2017, EU Commissioner Margrethe Vestager (Competition) ruled that Luxembourg had provided illegal state aid to Amazon. Based in the Grand Duchy of Denmark, the company enjoyed competitive advantages through a favourable tax deal (‘ruling’) from 2003, which was extended in 2011.
As a result, Amazon didn’t have to pay tax on nearly three-quarters of its profits, according to Vestager, and paid four times less than other local businesses, Vestager said at the time.
According to her, the Luxembourg tax authorities used an unjustified method to calculate the tax assessment through construction with two Amazon subsidiaries between which profits were shifted. This allowed Amazon to reduce tax payments.
The ruling is a fresh slap in the face of the Commission, which was also rebuffed last year after it ordered Ireland to collect 13 billion euros in ‘back tax’ from the American tech giant Apple and the Netherlands 25 million from the American coffee roaster Starbucks.