Judges from the European Union’s second-highest court have rejected a €250 million ($300 million) tax bill lodged against Amazon in 2017 as part the bloc’s ongoing fight against the company.
The case was one of a number spearheaded by Margrethe Vestager, the European Commissioner for Competition, in which sweetheart tax deals given to powerful corporations were framed as a form of illegal state subsidy. The most notable of these was a 2016 case in which Apple was ordered to pay Ireland €13 billion ($14.9 billion) in back taxes. This decision was annulled in 2020 by the same court involved in today’s ruling.
The Amazon case can be traced back to 2006, when the e-commerce giant established a labyrinthine tax structure in Europe that allowed it to funnel revenue from all EU sales through a subsidiary based in Luxembourg. Internally, Amazon referred to this as Project Goldcrest, named after Luxembourg’s national bird.
In 2017, the European Commission ruled that this structure was illegal and had allowed Amazon to avoid around €250 million in taxes. “Luxembourg gave illegal tax benefits to Amazon,” said Vestager at the time. “As a result, almost three quarters of Amazon’s profits were not taxed. In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules.”
In Amazon’s most recent financial filings it recorded revenue of €44 billion ($53 billion) passing through its Luxembourg subsidiary. But this subsidiary, which has 5,262 employees, also registered €1.2 billion in losses, and so paid zero corporation tax.