Victory for Amazon: A court fined 250 million euros by the European Union

Victory for Amazon: A court fined 250 million euros by the European Union

The EU General Court – which is the second most important in the European Union – has sided with Amazon in a dispute over a tax payment of 250 million euros.

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The Luxembourg court overturned the 2017 European Commission ruling, ordering the e-commerce giant to pay 250 million euros in taxes. The current decision is a win for Amazon and a painful blow to Margaret Westgar, the EU’s competition commissioner, who is spearheading efforts to receive higher tax payments from technology giants such as Apple and Google.

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EU Competition Commissioner Margaret Wester

European Union Competition Commissioner Margaret Westgar

()Photo: AP)

This is not the first time the court has overturned its decision. For example, in its 2016 ruling that Ireland would have to collect € 13 billion from taxes, Apple overturned the court, and Wester appealed the decision to the European Court of Justice.

In addition to Apple and Amazon, Westger has ordered increased tax payments for other large companies, including Starbucks, Nike and Fiat Chrysler. There is a demand to create a balance between all the member states of the Union based on their claims, through the fact that governments will not be allowed to offer special tax transactions to companies.

The court’s current ruling concerns the tax framework used by Amazon in Europe, which was referred to within the company as the “Goldcrest Project” – named after the Luxembourg national bird. As planned, the company transferred all its online sales to the EU through the operating company Amazon EU SARL, which paid a higher royalty every year to the parent company registered in Luxembourg, where no income tax is levied. Thus, in the end, the income of the operating company on which the tax was levied decreased.

The European Union claimed that in order to dent the operating company’s profits, Amazon had improperly increased royalties, and so the European Commission ordered Luxembourg to collect € 250 million from Amazon in unpaid taxes for eight years – In 2011–2003.

Amazon argued in its appeal that the decision was based on legal and factual errors, and that payments made by it complied with international tax principles. Luxembourg also appealed the verdict.

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