In a judgment handed down on Thursday 14 December (C-457/21 P), the Court of Justice of the European Union (CJEU) ruled that the European Commission had not established that the ‘tax ruling’ granted in 2003 by Luxembourg to the multinational company Amazon was incompatible with the European Union’s internal market.
The CJEU had been asked to rule on the Commission’s appeal against the EU General Court’s judgment of May 2021 (Cases T-318/18 and T-816/17) annulling its October 2017 decision that the giant Amazon had benefited, between 2006 and 2014, from an advance tax ruling constituting unlawful state aid under EU law and valued at €250 million (see EUROPE 12719/14).
The Luxembourg ‘tax ruling’ at issue endorsed the transfer, via a royalty on intellectual property rights, of a large proportion of the profits of the operating company Amazon EU, the company responsible for the group’s commercial activities in Europe, to the holding company Amazon Europe Holding Technologies (LuxSCS). During the relevant period, this company, which had no office or employees, acted as an intermediary between Amazon EU and the controlling company in the United States to transfer the intellectual property rights to the operating company.
In its judgment, the Court dismissed the Commission’s appeal.
In particular, the European Court took the view that the Commission’s decision should be annulled because it had incorrectly determined the ‘reference system’, the first stage in analysing a national measure in the light of the EU rules governing State aid. The Commission could have invoked the arm’s length principle, which makes it possible to assess whether intra-group transactions are carried out in accordance with market conditions, but only if this principle is incorporated into Luxembourg tax law, as it has no autonomous existence in EU law.
The Court thus confirmed its case law on the reference framework, set out in November 2022 on the ‘tax rulings’ granted to Fiat-Chrysler (C-885/19 P and C-898/19 P) (see EUROPE 13059/14).
See the Court’s judgment: https://aeur.eu/f/a55 (Original version in French by Mathieu Bion)