Online retailer Amazon has not paid taxes in Europe again – the European Commission’s attempt to change that has now failed in court, as has Apple. Why?

I.In July it was Apple; Now it’s Amazon. The European Commission has again suffered a heavy defeat in court tax relief. On Wednesday, the responsible EU court (EuG) ruled in favor of the European Union Competition Authority in 2017, requiring the state of Luxembourg to recover 250 million euros and interest from Amazon tax breaks. According to the court, the commission has not legally proven that a tax assessment from Luxembourg authorities in line with the needs of online retailers has wrongly reduced the tax burden on a European Amazon subsidiary. Not only Amazon, but also Luxembourg went to court against the commission’s decision: the Grand Duchy gladly gave up money to keep the company. Amazon is one of the largest employers in the country. In 2016, Ireland acted in a similar way and demanded a return of 13 billion euros from Apple – and by 2020 it had done just that.

Amazon, Apple, and Google, Starbucks and others: Large international corporations – especially American digital companies – have always been skeptical of their European headquarters being particularly favored by tax authorities. They process a large portion of EU sales through the holding companies there and thus save on taxes. The precondition for this is usually the preliminary agreements (tax laws) with the tax authorities, which are appropriate for the company concerned. Since 2013, the EU Authority has repeatedly used the means of the State Assistance Act to deal with these special agreements. From 2006 to 2014, Brussels complained about tax breaks for Amazon in Luxembourg. In 2017, the commission found that online retailers had not paid tax on three-quarters of profits from EU sales during this period.