Amazon Dodges US$300 Million EU Tax Order


  • European judges noted that the European Commission failed to show proof of preferential treatment to Amazon by Luxembourg.
  • European Commissioner for Competition Margrethe Vestager had filed the tax evasion case against Amazon.
  • In 2020, Ms. Vestager had lost another tax evasion case against Apple Inc., which was to pay 13 billion euros in back taxes.

A European court has ruled in favor of American online retailer Inc. in a US$300 million tax evasion case brought by the European Commission. The European judges noted that the Commission failed to show any proof of preferential treatment to the company by Luxembourg.

The European Union had asked Amazon to pay 250 million euros (US$300 million) as back taxes to Luxembourg, considered tax heaven for companies.

The European Commissioner for Competition, Margrethe Vestager, who had filed the case against Amazon, has been fighting against tax benefits to multinational companies.

Wednesday’s order by the EU’s General Court is a major blow to her campaign, but she won’t give up her case easily. According to lawmakers, Ms. Vestager will continue her crusade against the multinational companies which refuse to pay their legitimate taxes.

Also Read: Jeff Bezos sells Amazon shares worth US$2.5 billion in May

In their verdict, the judges noted that the commission could not prove that Amazon had received special treatment over the past two years.

In 2020, Ms. Vestager had lost another tax evasion case against Apple Inc., which was to pay 13 billion euros in back taxes. These two big court wins by the two companies may prove a major hurdle as the EU takes up the cudgel for tax reforms in Europe, said an observer.

Pic Credit: Pixabay.

Also Read: How Will Amazon’s Alberta-Based Solar Plant Affect Canada?

Overhauling EU’s Tax Policies

Meanwhile, Amazon has welcomed the order and said it would continue its business in Luxembourg, where it has the headquarters for its European subsidiary Amazon EU Sarl. The Luxembourg government stressed before the court that it is not aiding Amazon or breaking the law.

The lawmakers supporting Ms. Vestager have urged the court to review its decision. They stressed that a systematic approach is needed for overhauling the taxation policies. They also agree on the idea of 21% minimum tax rate on all multinational companies floated by US President Joe Biden.

Also Read: Big Tech gets bigger in March quarter

Experts say the minimum tax rate will avert tax-dodging by the big companies and stop countries from providing legal ways to evade tax to keep the competition fair.

Although Amazon’s court victory is small in financial terms, as its earnings per quarter are in billions of dollars, it can give hope to other multinational companies subjected to tax inquiries in the EU.

Amazon reported no tax charge in 2018-2020. As per corporate filing in Luxembourg, it has been paying fees for using intellectual property rights tax exempted. The company may have saved around 600 million euros in this way.

Also Read: Amazon’s Net Profit More Than Triples In Q1 As Revenue Hits US$100B

Luxembourg let Amazon evade tax for three quarters, according to a ruling of the European Commission in 2017. It was possible by allowing it to channel the profit through a tax-free route.

While Amazon has won the battle, another French company Engie has lost its appeal and will have to pay back 120 million euros to Luxembourg.

Also Read: Amazon Stocks (NASDAQ:AMZN) Shine On Stock Split Hopes

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK