EU court sides with Amazon in dispute over Luxembourg taxes

A European court has ruled that US retail giant Amazon did not receive 250 million euros in illegal tax benefits in Luxembourg, dismissing an EU order to pay back the taxes. French energy giant Engie, meanwhile, lost an appeal against a similar order. These are the latest verdicts in a string of cases against secret deals in Luxembourg unearthed by LuxLeaks.

The EU's General Court has ruled that Amazon's tax deal with Luxembourg was legal, and dismissed the Commission's order for it to pay 250 million in back taxes. © Ina Fassbender/AFP

The EU General Court overrode an order from the European Commission that would have forced Amazon’s subsidiary in Luxembourg to pay back 250 million euros.

In 2017, the Commission's competition chief, Margrethe Vestager, said Luxembourg’s special royalty rate privileges for Amazon amounted to illegal state aid, allowing the company to pay less tax than other businesses.

But the court found that the arrangement gave Amazon "no selective advantage" over its competitors. It also said the Commission had failed to establish the company’s “tax burden was artificially reduced as a result of an overpricing of the royalty”.

Amazon welcomed the decision, which it said was “in line with our long-standing position that we followed all applicable laws and that Amazon received no special treatment”.

Engie deal illegal

The same court ruled that an arrangement between Luxembourg and Engie had resulted in a tax advantage, and it ordered the French multinational to repay 120 million euros in taxes.

The 2014 LuxLeaks revelations showed secret deals between Luxembourg and hundreds of companies guaranteeing very low tax bills, which the Commission has found often amounted to unfair competition.

• Amazon to pay taxes in France, other EU countries after Luxleaks scandal

The Commission has said that regardless of their outcomes, these cases have a positive effect on international efforts to close tax loopholes.

Last year, Apple won its appeal against the Commission's order in 2016 that it pay Ireland 13 billion euros in back taxes.

• France makes Apple pay 10 years of back taxes

The Commission appealed the decision, and the case will now go to the European Court of Justice, the EU’s highest judicial body.