On Thursday, Europe’s highest court ruled in favor of Amazon in a case where the European Commission had accused the U.S. e-commerce giant of receiving unlawful tax advantages. The European Court of Justice (ECJ) stated that the Commission, representing the EU’s executive branch, had failed to demonstrate that the tax arrangement between Amazon and Luxembourg constituted “state aid that was incompatible with the internal market.” The decision emphasized that the Commission had not substantiated the claim of illegal tax benefits for Amazon.
In a statement released on Thursday, Amazon expressed its satisfaction with the court’s decision, stating, “We welcome the Court’s ruling, which confirms that Amazon followed all applicable laws and received no special treatment.” The origins of the case trace back to 2017 when the European Commission accused Amazon of benefiting from tax advantages in Luxembourg, where its European headquarters is located.
In 2017, Amazon was mandated to reimburse Luxembourg with 250 million euros (approximately $270 million). Challenging the ruling, the U.S. tech giant appealed the decision. In 2021, a subordinate EU court sided with Amazon, with the EU’s general court asserting that the Commission had not substantiated the claim of an illegal tax advantage provided to Amazon by Luxembourg.
Subsequently, the Commission appealed the decision, escalating the case to the European Court of Justice (ECJ), the highest court in Europe. The ECJ dismissed the Commission’s appeal, dealing another setback to the EU’s competition chief, Margrethe Vestager. Vestager has been actively working to curtail the influence of technology companies within the 27-member bloc and scrutinize certain aspects of their tax practices.
In 2016, the Commission directed Ireland to recover 13 billion euros in retroactive taxes from Apple. The EU contended that Ireland, serving as Apple’s European base, had granted the U.S. tech giant preferential tax treatment. Apple successfully appealed in 2020, putting a halt to the tax recovery process. However, the Commission is currently challenging this decision, and the European Court of Justice (ECJ) may ultimately have the decisive say in this ongoing case as well.