General Court of the EU sides with Amazon on tax subsidies

The General Court of the EU has issued its judgement in cases T-816/17Luxembourg v Commission and T-318/18 Amazon EU Sàrl and, Inc. v Commission stating that the European Commission did not prove to the requisite legal standard that there was an undue reduction of the tax burden of a European subsidiary of the Amazon group.

In 2006, Amazon set up a subsidiary based in Luxembourg and a structure that allowed for its sales in all EU states to be passed through without paying corporate tax in the EU. In 2017, the European Commission ruled that this structure is illegal and that it had allowed Amazon to avoid around EUR250 million in taxes. This judgment of the General Court has annulled the ruling of the European Commission and declared Amazons’ tax arrangement legal. The judgement can be appealed to the European Court of Justice.

The courts have dealt with a similar case when Apples’ structure set up in Ireland to funnel profits outside the EU has been similarly declared legal in 2020 and is now awaiting ruling of the European Court of Justice in the appellate procedure.