In a significant blow to the European Union’s efforts to combat preferential tax arrangements, the EU’s top court has ruled in favor of Amazon, relieving the tech giant from a €250 million ($273 million) back-tax obligation to Luxembourg. The Court of Justice of the European Union stated that the European Commission failed to prove that Luxembourg’s tax ruling for Amazon constituted state aid incompatible with the EU’s internal market.

1. Defeat for EU Tax Crackdown: The court’s decision marks a setback for the EU’s ongoing crackdown on favorable tax deals for multinational corporations. The ruling emphasizes the challenges in proving such cases and highlights the legal complexities surrounding tax arrangements.
2. Lack of State Aid Proof: The Court of Justice concluded that the European Commission could not establish that the tax ruling granted to Amazon by Luxembourg amounted to state aid that violated the EU’s internal market regulations. This lack of evidence led to the court’s decision in Amazon’s favor.
3. Final Decision: The court’s ruling is definitive, indicating that Amazon is not obligated to pay the €250 million in back taxes. This outcome underscores the legal hurdles faced by regulatory authorities in pursuing retroactive tax claims against major corporations.
4. Amazon’s Response: An Amazon spokesperson welcomed the court’s decision, stating that it confirms Amazon’s compliance with all applicable laws and the absence of special treatment. The company expressed its commitment to focusing on customer service across Europe.
5. Oxfam’s Criticism: Oxfam’s EU tax expert, Chiara Putaturo, criticized the ruling, characterizing it as an early Christmas present for Amazon. Putaturo emphasized the need for genuine tax reforms within the EU and urged action against tax havens that enable companies to evade tax responsibilities.
6. Vestager’s Mixed Record: The court’s ruling highlights the varied success of Margrethe Vestager, the EU’s antitrust chief, in defending tax decisions against legal challenges. This follows a recent case where French utility Engie won against an EU order to pay €120 million in back taxes to Luxembourg.

The EU court’s decision favoring Amazon in the tax dispute adds complexity to ongoing efforts to address tax avoidance by multinational corporations. As the EU faces challenges in establishing violations of state aid rules, the ruling underscores the importance of robust tax reforms and regulatory frameworks to ensure fair taxation practices within the bloc. The outcome resonates in the broader context of multinational tax accountability and the evolving landscape of international tax laws.