By Pierre Briançon
Europe’s second-highest court on Wednesday annulled a European Commission ruling that ordered online retailer Amazon to pay some €250 million to Luxembourg, as part of an attempt to crack down on unfair tax breaks extended to big multinationals by European Union member states.
The General Court said that the EU’s top executive body, which had declared the aid incompatible with internal-market rules, had not proven that Luxembourg had granted a “selective advantage” to Amazon’s /zigman2/quotes/210331248/composite AMZN -1.56% local subsidiary.
Luxembourg, as well as Amazon, had contested the 2017 order. The General Court’s decision can still be appealed to the Court of Justice, Europe’s highest court.
A similar decision against Apple /zigman2/quotes/202934861/composite AAPL -0.22% , ordering Ireland to reclaim some €13 billion of back taxes from the iPhone maker, had already been annulled by the General Court. That ruling is now being appealed.
Wednesday’s decision strikes a blow to the EU’s legal strategy of dealing with the low taxes paid by multinationals by alleging that tax breaks granted by individual countries to lure their business amount to illegal state aid.
From the archives (October 2020): Amazon sought to hire intelligence analysts in EU spying row
The outlook: The European Commission has won some and lost some — the court sided with it in a similar case against car maker Fiat /zigman2/quotes/204248628/composite STLA +0.99% , for example. But its crusade against the low tax burden of big multinationals may soon become obsolete if a global agreement is struck within the Organization for Economic Cooperation and Development, as could happen this year.