It’s another blow to Europe’s efforts to recover tax revenue from US tech giants.
Amazon has won an EU appeal after being hit with a €250 million ($303 million) tax bill by the European Commission (EC) in 2017, the WSJ has reported. After a similar decision in favor of Apple, the judgement is another setback for the EU in its effort make US tech giants pay more taxes.
While Apple’s case centered around so called “state aid” from Ireland, Amazon came under fire for the use of an operating company based in Luxembourg. From 2006 to 2014, Amazon paid a significant royalty to that company, called Amazon Europe Holding Technologies SAS, reducing its taxable income. The commission accused it of inflating that royalty to reduce its operating profit. (Amazon has since changed its tax structure.)
However, Amazon argued that the decision was full of “methodological errors” and that the payments were legal according to international tax principals. Europe’s second-highest court agreed, ruling that the setup didn’t confer any advantage to Amazon over other companies and that “the contested decision must be annulled in its entirety.” It’s not yet clear if the EC plans to appeal.
Under European Commission executive VP Margrethe Vestager, Europe has tried extract a larger share of taxes from the enormous revenues earned by Amazon, Apple, Google and other US tech giants. It also lost on appeal after demanding that Apple pay as much as $15 billion in back taxes over another state aid claim known as the “Double Irish” (the EC plans to appeal that one to Europe’s highest court). The bloc also fined Google three times over antitrust claims, all of which Google has also appealed.
On top of the state aid claims, the EC has also filed antitrust charges against Apple and Amazon. At the same time, G20 countries and the Organization for Economic Cooperation and Development (OECD), are working on potential global minimum taxes and other rules. Those might help make taxation more clear for big tech and ease some of the legal battles raging in the EU, US and elsewhere.