European justice continues to reshape the plan around competition authority decisions as the European Commission revisits a controversial tax case involving Luxembourg and Amazon. In a front-facing briefing, Juliane Kokott, the General Counsel at the EU Court of Justice, notes that the Commission may have misread the tax arrangements. She suggests that Brussels could be mistaken in declaring that Luxembourg granted illegal state aid through financial incentives, and that the Community Executive’s appeal should be rejected to uphold the General Court’s annulment which overturned the initial ruling compelling Amazon to return funds to Luxembourg’s treasury. The amount in question, 250 million euros, lies at the heart of Brusselslagged concerns and is central to the ongoing dispute over what constitutes illegal tax breaks.
The litigation traces back to a complaint filed in October 2017 by the European Commission, challenging Luxembourgormed tax benefits granted to Amazon in a 2003 provisional decision. The Commission argued that the arrangement did not align with OECD principles of free competition and provided a selective advantage to the Amazon subsidiary operating in Luxembourg. Both the Luxembourg government and the company challenged the decision before the EU General Court, which ultimately annulled the Commission’s decision in May 2021. As announced on Thursday, the Commission has not demonstrated that the agreement effectively reduced the tax burden in a way that conferred an abstract or artificial advantage.
Bringing the matter forward, rivals to Amazon pressed their case, appealing the General Courtinal stance. In the Attorney Generalirst conclusions, Brussels was described as having inadvertently applied Luxembourg national law when assessing the existence of any selective advantage. The AG argued that this error tainted the Commissioninding and that the subsequent observations in the decision contained further legal flaws. The AG therefore maintained that the General Court was correct to overturn that judgment on the basis of different grounds, while still acknowledging the ongoing question of whether the Commissionindings about selectivity were valid.
The been-waiting argument from the lawyer continued: the European Commissioniled objection appeared unfounded. Luxembourg has openly acknowledged that the method used in the provisional tax decision was not clearly erroneous and not substantially misapplied. The lawyer contends that only clearly erroneous provisional tax decisions can amount to a taxpayeravorable advantage due to the tax autonomy of member states. In short, the Commission would have to prove that the early tax decision created a real and measurable advantage for Amazon, which, according to the argument presented, it did not manage to establish.
Until a final decision is issued in the coming months, the CJEUinal rulings in this area do not look favorable for the European Commission. Earlier this year, the Court faced another high-profile case in Brussels, where the multinational Fiat was ordered to repay €30 million in tax benefits that the Court found had been inconsistent with existing tax norms from a different fiscal decision dating back to 2012. The sequence of rulings underscores the tension between national tax sovereignty and the reach of European competition rules, and it keeps the broader debate about state aid and corporate taxation very much alive in EU institutions and among member states.