EU court rules in favour of Amazon in corporate tax repayment case

Amazon won its court battle in the EU over a corporate tax repayment to Luxembourg, in contrast to the Apple and Ireland tax order last month. Picture: Michael Sohn/AP

Amazon won its court battle in the EU over a corporate tax repayment to Luxembourg, in contrast to the Apple and Ireland tax order last month.

The European Court of Justice ruled the multinational is not required to pay €250m in corporate tax to Luxembourg and also dismissed the argument that the tax agreement given to Amazon was a State aid that was incompatible with the internal market.

This decision by the top EU court hinders efforts to tackle favourable tax deals between large corporations and countries they are based in.

Amazon said the ruling “confirms” that it “followed all applicable laws and received no special treatment.” Overall, the commission has had a mixed success in the bloc’s courts, as companies challenged their tax orders. But judges have at least backed the regulator’s novel policy of using state-aid law to attack unfair tax aid.

Amazon welcomed the ruling, saying it confirms that the company “followed all applicable laws and received no special treatment”.

Meanwhile, the EU competition chief Margrethe Vestager backed the EU Commission's €13bn tax order to Apple.

The landmark case now hinges on a final ruling from the EU court. A court adviser last month said judges should topple the iPhone maker’s earlier court success.

“The court is hugely limiting what we can do in order to make sure that companies pay their fair share of taxes,” Ms Vestager said after the ruling. “We still have quite some way to go despite what we have done in the last 10 years, in order to secure tax justice”.

Overall, the commission has had a mixed success in the euro area’s courts, as companies challenged their tax orders. But judges have at least backed the regulator’s novel policy of using state-aid law to attack unfair tax aid.

Apple could also face a potentially hefty fine as well as a ban on App Store rules it allegedly used to thwart music-streaming rivals, as the EU's continues to crackdown on Big Tech.

EU regulators are putting the finishing touches to a decision on Apple’s practice of blocking music services from pushing their users away from the App Store to alternative, cheaper, subscription options, according to people familiar with the investigation.

• Additional reporting by Bloomberg