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. 

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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. 

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