Amazon wins court appeal as it battles the EU over a $300 million tax bill

KEY POINTS

• The EU's general court said the European Commission failed to prove that Luxembourg had given Amazon an illegal tax advantage.
• It was the court's second such ruling against the commission in less than a year.
• In July, it said the EU's team led by Margrethe Vestager failed to prove that the Irish government had given a tax advantage to Apple.

A sign at the Amazon.com, Inc. BHM1 fulfillment center is seen on March 29, 2021 in Bessemer, Alabama.

Patrick T. Fallon | AFP | Getty Images

LONDON — Amazon on Wednesday won its appeal against the European Commission, which had ordered the U.S. tech giant to pay back 250 million euros ($303 million) in taxes to Luxembourg.

The EU's general court said that the commission, the EU's executive arm, had failed to prove that there was an illegal tax advantage given to Amazon by Luxembourg — where the U.S. firm has its European subsidiary.

The Brussels-based commission had said in 2017 that Luxembourg had granted undue tax benefits to Amazon. The commission said at the time that Amazon was allowed to pay four times less tax than other local companies subject to the same national rules. However, Amazon contested that assessment.

"We welcome the Court's decision, which is in line with our long-standing position that we followed all applicable laws and that Amazon received no special treatment," a spokesperson for the company told CNBC via email on Wednesday.

Europe's competition chief Margrethe Vestager said: "We will carefully study the judgment and reflect on possible next steps."

The institution can decide to appeal the court ruling and take the case to the EU's highest court.

Why it matters?

It was the court's second such ruling against the commission in less than a year. In July, the court said the EU's team, led by Margrethe Vestager, failed to prove that the Irish government had given a tax advantage to Apple. The commission had ordered Apple to repay some 13 billion euros in unpaid taxes in 2016.

The commission has since decided to take this case to the European Court of Justice, while at the same time studying ways on how to sharpen up its toolkit to combat what it describes as unfair market competition.

In this context, European lawmakers are debating two legislative proposals that could bring about sweeping changes. Under these proposals, the EU's aim is to enforce remedies that will lead to practical changes, rather than fining those that constantly breach the rules.