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The Court of Justice of the EU rejected an appeal brought by the European Commission against an order of the General Court in favor of Amazon.com (NASDAQ:AMZN) related to certain tax payments in Luxembourg.
The Court of Justice of the European Union, or CJEU, consists of two courts — the Court of Justice and the General Court.
“The Court of Justice confirms that the Commission has not established that the tax ruling given to Amazon by Luxembourg was a State aid that was incompatible with the internal market,” said the Court of Justice.
As a result, Amazon would not have to pay €250M (about $273M) in back taxes to Luxembourg, according to a report from Reuters.
The Court of Justice said that by a tax ruling of 2003, the Luxembourg authorities accepted Amazon’s proposal related to the treatment of two of its subsidiaries set up in Luxembourg for the purposes of Luxembourg corporate income tax. By a decision of 2017, the European Commission, or EC, found that that tax ruling constituted a State aid that was incompatible with the internal market.
However, Luxembourg and Amazon challenged the Commission’s decision before the General Court of the European Union.
In May 2021, the General Court ruled that the EC had not shown that the Amazon’s subsidiary had benefited from an undue reduction in its tax burden. It held that Luxembourg had not granted a selective advantage in favour of that subsidiary and thus annulled EC’s decision.
In its ruling on Thursday, the Court of Justice said that it uphold the judgment under appeal, since the Commission decision had to be annulled in any event because of the incorrect definition of the ‘reference system’ rather than for the reasons given by the General Court.
“The General Court had annulled the Commission Decision owing to errors committed in the application of that reference system and, therefore, on the basis of an inaccurate hypothesis that that system complied with the treaty,” said the Court of Justice.
The tax case against Amazon was part of EU antitrust chief Margrethe Vestager’s larger crackdown against deals between companies and EU nations which regulators saw as unfair state aid.
Last month, an advisor to the Court of Justice said that the General Court made errors when it ruled in favor of Apple (AAPL) over a €13B (about $14B) tax order and should review the case again.
Vestager, who is on temporary leave to pursue a bid for the presidency of the European Investment Bank — biggest legal win came in September when the General Court upheld her decision against a €700M Belgian tax scheme for 55 multinationals.
