Amazon will not be required to pay €250 million ($263 million) in back taxes after the European Commission announced the closure of a long-standing state aid investigation. This decision brings an end to one of the company’s most notable legal battles in Europe.
The Commission had initially ruled in 2017 that Amazon had used an operating company in Luxembourg to reduce its tax obligations between 2006 and 2014. According to the Commission, this shell company, which lacked offices and employees, was created solely to help the e-commerce giant minimize its tax bill. The arrangement allegedly allowed Amazon to avoid taxation on about three-quarters of its EU profits during the specified period.
Amazon successfully appealed the ruling in 2021. The company argued that the Commission’s findings contained “methodological errors” and maintained that its tax practices complied with international tax laws. Europe’s second-highest court agreed, stating that Amazon’s tax structure did not provide an unfair advantage over its competitors, and annulled the Commission’s original decision.
Following the court’s ruling, the Commission announced this week that it was dropping the case, citing guidance from the EU Courts.
While the closure of the Amazon case marks a defeat for the European Commission, the regulatory body recently secured a significant win against Apple. In September, Europe’s highest court ruled that Apple must repay €13 billion ($14.4 billion) in illegal tax benefits granted by Ireland in 2016.
Featured Image courtesy of GUSTAVO GRAF MALDONADO/REUTERS
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