On Wednesday, Amazon won its fight against an EU order to pay Luxembourg back almost 250 million euros ($ 303 million) in taxes, as Europe’s second-largest court slammed the bloc’s reprimand against unfair tax deals for multinationals.
In a separate case, French utility Engie lost its appeal against an EU order to pay a tax of 120 million euros ($ 145.7 million) to Luxembourg. The Luxembourg-based General Court stated that Amazon has not enjoyed a selective advantage in its tax deal with Luxembourg.
The judge said, “The Commission 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 Amazon ruling is a blow to European Competition Commissioner Margrethe Vestager, who has aggressively used the bloc’s state aid rules to deal with sweetheart tax deals between multinationals and European Union countries.
Vestager has a mixed record to date. The biggest setback was last year when the General Court gave its order to iPhone maker Apple (AAPL.O) to pay 13 billion Euros ($ 15 billion) in Irish back tax. In 2019, the same court rejected his order to pay Starbucks (SBUX.O) up to 30 million Euros in Dutch back taxes and also overturned an order seeking to repeal the Belgian tax break, in which 39 multinationals including BASF benefited and B.P. (BP.L).
However, the EU competitor got court support for its order to pay taxes of up to 30 million Euros to Fiat Chrysler Automobiles. The carmaker has appealed to the European Union Court of Justice, the highest court in Europe. Vestager has successfully changed its taxing practices to Ireland, Luxembourg, the Netherlands and Belgium, and inspired the Organization for Economic Co-operation and Development (OECD) for a global deal on how multinationals are taxed.
In 2017, The European Commission said that the Grand Duchy spared the US online retailer from taxing nearly three-quarters of its profits from EU operations, allowing the channel’s profits to tax a holding company tax-free gives.
The decision taken in 2018 on Engie, the European Union stated that the arrangement with Luxembourg officials had artificially reduced the company’s tax burden, meaning it had taken an effective 0.3% profit over a few decades of profits in Luxembourg Corporate tax rate paid. The court sided by the commission, stated that the French utility had benefitted from the tax benefit. (Reuters)
(1 Euro = 1.21 USD)
