Sat, 19 Jun 2021

Amazon defeats EU in bid to collect $303 million in taxes

Robert Besser
16 May 2021, 20:34 GMT+10

BRUSSELS, Belgium: In a setback to competition chief Margrethe Vestager's campaign against preferential deals, Amazon won its fight against an EU order to pay about $303 million in back taxes to Luxembourg.

The bloc failed to show that Luxembourg had given the U.S. online retailer special treatment in violation of state aid rules, the EU's General Court ruled on May 12.

The ruling follows Vestager's landmark defeat against Apple last year, which had contested an order that it pay $15 billion in Irish back taxes.

Both Amazon and Apple were targeted by Vestager in a crusade to weed out tax deals used by EU states, including Luxembourg and the Netherlands, to attract large companies.

"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 Luxembourg-based EU judges said.

Amazon, in a statement, welcomed the ruling, saying it was in line with "our long-standing position that we followed all applicable laws and that Amazon received no special treatment".

Vestager said she would examine the ruling before deciding whether to appeal to Europe's top court.

However, Vestager is unlikely to stop her campaign, said Ioannis Kokkoris, professor of competition law and economics at London-based Queen Mary University of London.

In a separate case on Wednesday, French utility Engie lost its appeal against an EU order to pay back taxes of 120 million euros to Luxembourg, but the focus was on the Amazon decision, which was criticized by groups campaigning for higher taxes to be levied on multinationals.

"Today's ruling is a blow," said Chiara Putaturo, a tax expert with Oxfam EU. "It shows again that case-by-case investigations do not solve large-scale tax dodging."

Like Oxfam, EU lawmakers said there was a need for a systematic approach and urged the bloc to back U.S. President Joe Biden's call for a 21 percent minimum tax rate on multinationals.

"Such a minimum tax rate would allow member states to reclaim lost tax revenues from Amazon in the future. This would put an end to Luxembourg's business model as a tax haven," EU lawmaker Sven Giegold said.

"At the same time, public country-by-country reporting must be introduced as soon as possible. Then, large corporations will have to disclose their profits and taxes paid per country," Giegold said.

Vestager's success in making Belgium, Ireland, Luxembourg and the Netherlands change their tax practices has helped to spur efforts for a global agreement.

In its 2017 ruling, knocked down on Wednesday, the European Commission said Luxembourg spared Amazon from paying taxes on almost three-quarters of its profits from EU operations by allowing it to channel profits tax-free to a holding company.

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