Amazon wins court appeal over €250 million EU tax bill

Competition regulators failed to prove that Amazon received an unfair advantage from local tax rulings

In a major setback to the EU's efforts to get more taxes from tech giants, Europe's second highest court has ruled that Amazon need not pay €250 million (£215 million) in back taxes to Luxembourg.

Europe's General Court overturned a 2017 ruling by the European Commission, which concluded that a tax deal between Amazon and the government of Luxembourg in 2006 amounted to illegal state support.

15 years ago, Luxembourg convinced Amazon to shift its collection of profits across much of Europe to the Grand Duchy.

The court said that the competition regulators had failed to prove that Amazon received an illegal advantage from the tax rulings, adding that the Commission was 'incorrect in several respects.'

Amazon welcomed the decision, saying it was in line with the company's long-standing position that it received 'no special treatment' from Luxembourg and followed all applicable laws in the country.

The European Commission had asked Amazon to pay €250 million in taxes to Luxembourg four years ago.

"Luxembourg gave illegal tax benefits to Amazon. As a result, almost three-quarters of Amazon's profits were not taxed," Margrethe Vestager, Europe's competition commissioner, said at the time.

Vestager alleged that Luxembourg authorities allowed Amazon 'to pay four times less tax than other local companies subject to the same national tax rules.'

The ruling is a significant blow to Vestager, who is leading the EU's campaign against unfair tax deals. She, and the Commission, claim that such deals allow big tech firms to avoid hundreds of millions of euros in taxes in other member states.

The Commission lost another appeal last year, which Apple brought a €13 billion (£11.5 billion) tax ruling that the European Commission had sought to claim in back taxes.

Earlier this month, the Guardian reported that Amazon paid no corporation tax in Luxembourg last year, despite posting record sales income of €44 billion (£38 billion) in its local holding company.

Commenting on the new ruling, Vestager said that the Commission would carefully study the order before deciding whether to appeal to the EU's highest authority: the European Court of Justice.