Amazon's €250 million tax bill thrown out by EU judges

The decision is another blow to competition chief Margrethe Vestager and her crackdown of 'sweetheart' tax deals

Amazon has successfully overturned an order to pay $250 million (£214 million) in back taxes after the European Union's second-highest court rejected the European Commission's (EC) case.

The decision is another blow to EU competition chief Margrethe Vestager and her attempts to crackdown on preferential fiscal deals.

A judge for the General Court of the European Union found that the commission "did not prove to the requisite legal standard that there was an undue reduction to the tax burden" of Amazon's Luxembourg subsidiary. 

The case dates back to 2006 when Amazon established a complex tax structure in Europe that allowed it to take revenue from all EU sales via its Luxembourg operation. This was internally referred to as 'Project Goldcrest' - named after the national bird of Luxembourg. 

The EC ruled that the structure was illegal in 2017 and estimated that Amazon had used it to avoid paying around €250 million in taxes. At the time, Vestager said it meant that three-quarters of Amazon's European profits were not taxed and that the company was paying four times less tax than other local companies. 

The case is similar to one involving Apple and its operation in Ireland, which saw the company ordered to pay €13 billion in back taxes in 2016. However, that case was annulled in 2020, by the same court which presided over Wednesday's decision on Amazon. 

Related Resource

IT Pro 20/20: Understanding our complicated relationship with AI

The 16th issue of IT Pro 20/20 looks at the very human problems associated with artificial intelligence

IT Pro 20/20: Understanding our complicated relationship with AIDOWNLOAD NOW

In a statement, Amazon said,: "We welcome 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."

IT Pro has approached the EC for comment, but it has previously said that whatever the outcome of its legal action, it would ultimately highlight the issues of international tax loopholes.

So far, Apple, Starbucks and McDonalds have all managed to overturn tax cases and there are still ongoing battles with other major companies, such as the Italian car manufacturer Fiat, which also has an operation in Luxembourg. 

Featured Resources

The definitive guide to warehouse efficiency

Get your free guide to creating efficiencies in the warehouse

Free download

The total economic impact™ of Datto

Cost savings and business benefits of using Datto Integrated Solutions

Download now

Three-step guide to modern customer experience

Support the critical role CX plays in your business

Free download

Ransomware report

The global state of the channel

Download now

Most Popular

How to find RAM speed, size and type

How to find RAM speed, size and type

17 Sep 2021
What are the pros and cons of AI?
machine learning

What are the pros and cons of AI?

8 Sep 2021
Best MDM solutions 2020
mobile device management (MDM)

Best MDM solutions 2020

17 Sep 2021