Amazon (AMZN.O) argued on Thursday that an EU ruling forcing it to pay Luxembourg 250 million euros ($265 million) in unpaid taxes is based on “atmospherics” and should be overturned by Europe’s top court.
In its 2017 judgment, the European Commission argued a Luxembourg tax structure allowing Amazon to route revenues to a holding company tax-free meant it paid no taxes on over three-quarters of its EU profits, which amounted to unlawful state assistance.
In 2021, the U.S. online retailer defeated the EU tax ruling at a lower tribunal, thwarting competition head Margrethe Vestager’s assault on preferential deals.
The Commission appealed to the EU’s top court, the Court of Justice (CJEU).
“The Commission uses atmospherics to demonize Amazon and explain its conclusion. It says tax structuring and avoiding influenced the outcome. But no, “Amazon lawyer Michel Petite told the CJEU.
He said the EU executive’s appeal was unfounded because it used the improper reference framework to establish whether Amazon had a selective advantage, noting the CJEU’s ruling last year on Fiat’s tax dispute that national laws should be considered.
Petite also criticized the Commission’s transfer pricing policy.
“The Commission’s made-up transfer pricing is arguably most noteworthy since it depends on a contrived compilation of several versions of the OECD Guidelines, spanning more than 20 years,” he added.
Commission lawyer Paul-John Loewenthal declared Amazon’s Luxembourg tax agreement state assistance.
He claimed Luxembourg allowed Amazon to deduct most of its European profit from taxation in exchange for investments in Luxembourg, hurting intra-EU trade and distorting competition.
“It defines fiscal state aid.”
Vestager’s crackdown has changed tax policies in Belgium, Ireland, Luxembourg, and the Netherlands.
On June 8, the CJEU advisor will provide a non-binding opinion. C-457/21 P Commission v Luxembourg and Others.
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