Amazon tax opinion boosts Apple's legal battle over taxes paid in Ireland

Apple's ongoing court battle with the EU over taxes paid in Ireland has received a significant boost. 

An adviser to Europe's top court said today that another tech giant, Amazon, should not pay €250m in back taxes to Luxembourg as ordered by EU competition enforcers, as she cited errors in the EU regulatory assessment.

The European Commission in its 2017 decision said Amazon paid no taxes on almost three-quarters of its profits from EU operations due to a Luxembourg tax arrangement allowing it to channel profits to a holding company tax-free.

The EU antitrust watchdog equated the tax deal to illegal state aid. However, a lower tribunal in 2021 scrapped the EU decision, dealing a blow to EU competition chief Margrethe Vestager's crackdown on preferential deals.

"The Commission erred in deciding that Luxembourg had granted unauthorised state aid to Amazon in the form of tax advantages," Advocate General Juliane Kokott at the EU Court of Justice (CJEU) said in a non-binding opinion.

"The reference system relied on by the Commission in order to review whether there was a selective advantage, namely the OECD Transfer Pricing Guidelines rather than Luxembourg law, was incorrect," she said.

Kokott said the General Court's judgment annulling the EU decision should be upheld. The CJEU, which normally follows such recommendations in four out of five cases, will rule in the coming months.

In 2016, the Irish Government was told to recover €14.3bn in taxes and interest from Apple. In 2020, the General Court of the European Union annulled the decision but the commission has undertaken an appeal which was heard in May.

The appeal court will issue a non-binding opinion in the Apple case in November. A final ruling is likely to follow within six months after that.

Additional reporting Reuters