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

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

Patrick T. Fallon | AFP | Getty Images

LONDON — Amazon won its appeal against the European Commission on Wednesday, who 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 institution 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.

The European Commission was not immediately available for comment when contacted by CNBC on Wednesday. The institution can decide to appeal the court ruling and take the case to the EU’s highest court.

Why it matters?

The latest court ruling is the second one in the space of less than a year, where the outcome says the commission has not proven any tax advantage.

Back in July, the EU’s general court said that 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 then 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 currently debating two legislative proposals which 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.

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