An advisor to Europe’s top court said on Thursday that Amazon (AMZN.O) should not pay 250 million euros ($268 million) in Luxembourg back taxes as required by EU competition enforcers because the EU regulator’s analysis was flawed.
According to the 2017 decision of the European Commission, Amazon did not pay taxes on nearly three-quarters of its profits from operations in the EU because of a Luxembourg tax arrangement that allowed it to transfer profits to a holding company tax-free.
The EU antitrust watchdog compared the tax agreement to unlawful state aid. However, a lower tribunal in 2021 scrapped the EU decision, dealing a blow to EU competition chief Margrethe Vestager’s crackdown on preferential deals.
“The Commission erred in deciding that Luxembourg had granted unauthorised state aid to Amazon in the form of tax advantages,” Advocate General Juliane Kokott at the EU Court of Justice (CJEU) said in a non-binding opinion.
“The reference system relied on by the Commission in order to review whether there was a selective advantage, namely the OECD Transfer Pricing Guidelines rather than Luxembourg law, was incorrect,” she said.
Kokott supported upholding the General Court’s judgment that annuls the EU decision.
The CJEU, which normally follows such recommendations in four out of five cases, will rule in the coming months.
The case is C-457/21 P Commission v Luxembourg and Others.
($1 = 0.9339 euros)