The European Union's top court ruled in Amazon's favor, saving it €250 million ($273 million) in back taxes and ending an extended legal battle concerning tax arrangements between Amazon and the government of Luxembourg. This setback undermines the European Union's endeavors to address the issue of corporate tax evasion.
In support of a 2021 ruling by lower court judges who supported Amazon, the Court of Justice affirmed that the European Commission, the executive branch of the EU, had not provided sufficient evidence to support allegations that Amazon obtained unlawful state assistance.
"The Court of Justice confirms that the Commission has not established that the tax ruling given to Amazon by Luxembourg was state aid that was incompatible with the internal market of the EU," said the court in a press release, per Reuters.
Amazon responded to the ruling through a spokesperson, expressing appreciation for the EU court decision. "We welcome the Court's ruling, which confirms that Amazon followed all applicable laws and received no special treatment." The representative added that the online retail giant is looking forward to focusing on "delivering for our customers across Europe," the Amazon spokesperson stated, as per ABC News.
However, the decision faced criticism from Chiara Putaturo, Oxfam's EU tax expert. According to CNN, Putaturo commented that Amazon received "an early Christmas present this year, as the company dodged its decade-old tax bill to Luxembourg," which the firm can keep on doing.
Putaturo called for substantial tax reforms within the EU, urging authorities not to disregard tax havens that enable companies to evade tax obligations through the use of empty offices.
A Long Court Battle
This legal setback underscores the mixed track record of Margrethe Vestager, the EU's antitrust chief, in defending tax decisions against legal challenges. Earlier this month, French utility Engie successfully contested an EU order to pay €120 million ($132 million) in back taxes to Luxembourg.
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The case against Amazon dates back to 2017 when Vestager accused the company of unfairly benefiting from special low-tax conditions in Luxembourg since 2003. Vestager claimed that almost three-quarters of Amazon's profits in the EU remained untaxed.
The EU has been looking closely at deals between individual countries and businesses that bring in foreign multinationals looking for a place to set up their EU offices. These deals make member states compete with each other and let multinationals take advantage of the situation.
What Does This Case Win Mean for Amazon?
When asked about the decision, the European Commission said it "will carefully study the judgment and assess its implications."
Amazon's court triumph comes as global movements increase to alter company taxation and ensure major firms pay their fair amount. This case will certainly contribute to arguments about whether current tax systems are appropriate and if they require considerable reforms to address cross-border company issues.
Assuming that Amazon comes out of this court fight unharmed, the focus will now turn to what this means for the EU's position on corporate taxation and how well the steps taken to stop tax dodging work.
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