An EU court will decide on Wednesday on an appeal by the online giant Amazon against an order according to which Luxembourg will receive back € 250 million in unpaid taxes.
The decision will come less than a year after the iPhone maker Apple spectacularly won its appeal in the same court against the blockbuster order of the European Commission in 2016, according to which Apple should repay Ireland 13 billion euros.
French energy giant Engie will also learn the fate of its struggle against a similar EU regulation on tax repayment of 120 million euros in Luxembourg.
The cases came following the 2014 LuxLeaks revelations that uncovered secret deals between Luxembourg and hundreds of companies guaranteeing extremely low tax rates.
In the Amazon case, the European competition boss Margrethe Vestager accused Luxembourg in 2017 of an illegal business with the internet shopping giant of paying less taxes than other companies.
At the center of the EU case is a violation of the so-called “arm’s length principle”, which is intended to ensure for tax purposes that transactions between subsidiaries are based on prices that other companies would pay.
At the time of the EU case, Amazon said it “did not receive any special treatment from Luxembourg and that we paid taxes in full compliance with both Luxembourg and international tax law”.
Win or lose, the EU Commission will likely insist that the point of their cases to expose the practice of profit-shifting was made, with new rules being worked on to fill in gaps, especially for large technology.
In the past few weeks, the United States has embraced the idea of a global minimum corporate tax that will make special offers for multinational companies a thing of the past.
Talks are underway with the OECD to determine the minimum tax, which, if confirmed, would likely mean higher taxes for US tech giants and other multinational corporations.
In the case of Amazon, the EU said Luxembourg had granted the online shopping giant tax systems, which meant almost three-quarters of Amazon’s profits were not taxed.
The story goes on
The EU struggled to defend these decisions, losing to Apple, but also to Starbucks.
The Commission appealed the decision of the EU court in the Apple case, which will now go to the highest body in the EU, the European Court of Justice.
The lower court has also rejected an order from Brussels asking Starbucks to repay 30 million euros in taxes in the Netherlands, but upheld a decision against Fiat in Luxembourg.
arp / dc / lth