The European Commission Loses State Aid Case Luxembourg and Amazon

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In 2017, the European Commission wrongly instructed the Luxembourg government to claim 250 million euros in “arrears” in tax plus interest from the American internet department store Amazon.

 

This is the judgment of the General Court of the European Union in a case brought by the Luxembourg government and Amazon against the decision of the day-to-day EU administration.

In 2017, EU Commissioner Margrethe Vestager (Competition) ruled that Luxembourg had provided illegal state aid to Amazon. Based in the Grand Duchy of Denmark, the company enjoyed competitive advantages through a favourable tax deal (“ruling”) from 2003, which was extended in 2011.

As a result, Amazon didn’t have to pay tax on nearly three-quarters of its profits, according to Vestager, and paid four times less than other local businesses, Vestager said at the time. According to her, the Luxembourg tax authorities used an unjustified method to calculate the tax assessment through construction with two Amazon subsidiaries between which profits were shifted. This allowed Amazon to reduce tax payments.

The ruling is yet another slap in the face of the committee, which was also called back last year after ordering Ireland to collect 13 billion euros in “backlog” tax from US tech giant Apple and the Netherlands 25 million from US coffee roaster Starbucks.

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