Amazon wins EU fight over $300 million tax ruling

BRUSSELS — In the latest setback to European Union efforts to tackle corporate tax avoidance, a court Wednesday annulled a ruling by the European Commission that a tax deal between Amazon and Luxembourg’s government amounted to illegal state support.

The EU’s executive branch ordered the U.S. online retailer in 2017 to pay about $300 million in back taxes to Luxembourg. But judges at the EU’s General Court said the European Commission didn’t prove “to the requisite legal standard that there was an undue reduction of the tax burden of a European subsidiary of the Amazon group.”

Amazon said it welcomed the court’s decision, which is “in line with our long-standing position that we followed all applicable laws and that Amazon received no special treatment,” the company said in a statement.

The European Commission’s decision related to Luxembourg’s tax treatment of two companies in the Amazon group: Amazon EU and Amazon Europe Holding Technologies.

Margrethe Vestager, the EU official in charge of antitrust issues, argued at the time that Amazon had unfairly profited from special low tax conditions since 2003 in tiny Luxembourg, where its European headquarters are based. As a result, almost three-quarters of Amazon’s profits in the EU were not taxed, she said.

Both Luxembourg and Amazon challenged the decision with the EU’s General Court.

The EU has taken aim at deals concluded between individual countries and companies used to lure foreign multinationals in search of a place to establish their EU headquarters.

Judges at the General Court have backed the European Commission in several cases, but the European Union’s efforts to crack down on favorable tax deals suffered recent setbacks in cases involving Starbucks and Apple.

Wednesday’s ruling can be appealed to the 27-nation bloc’s highest court, the European Court of Justice.