EU Court of Justice rules for Amazon in $270 million tax dispute

Doug Cunningham
·2 min read
UPI
Europe's Court of Justice Thursday ruled for Amazon in a $270 million back taxes case. The court rejected an appeal from the European Commission that argued Amazon had received illegal state aid when Luxembourg allowed the company to transfer most of its European profits into a shell company to avoid taxes. File Photo by James Atoa/UPI

Dec. 14 (UPI) -- The European Union's Court of Justice Thursday sided with Amazon in a $270 million tax dispute with the European Commission.

The court ruled that the discount Amazon negotiated with Luxembourg, where the company's European headquarters are located, was not an illegal tax benefit.

"The Court of Justice confirms that the Commission has not established that the tax ruling given to Amazon by Luxembourg was a State aid that was incompatible with the internal market," the Court of Justice said in a statement.

Amazon was ordered to pay the back taxes in 2017 and the European Commission said at the time that an Amazon deal with Luxembourg amounted to illegal state aid.

After a three-year investigation the EU said Luxembourg allowed Amazon to transfer the majority of its European profits to Amazon Europe Holding Technologies, which was not subject to tariffs, slashing Amazon's European taxes.

The commission argued that Amazon used royalty payments to a shell company for nearly a decade to dodge taxes on 75% of its European profits. The Court of Justice ruled that was not illegal state aid.

The Court of Justice said it concluded that the Commission "had wrongly determined the 'reference system', which is the first step in analyzing a national measure in order to be able to categorize it as State aid."

Amazon praised the ruling in a statement Thursday

"We welcome the Court's ruling, which confirms that Amazon followed all applicable laws and received no special treatment," the company said.

Europe's General Court ruled for Amazon in 2021, finding that the European Commission did not prove that the Amazon tax break was illegal. The court held that Luxembourg had not granted a selective advantage and annulled the Commission's decision.

The Commission appealed that ruling to the Court of Justice.

"The Court of Justice upholds the judgment under appeal, since the Commission decision had to be annulled in any event because of the incorrect definition of the reference system, rather than for the reasons given by the General Court," the Court of Justice Thursday statement said.