Vestager comments on EU General Court tax rulings on Amazon and Engie

"We will carefully study the judgment", she said on the state aid case concerning e-commerce giant in Luxembourg

Photo: EU Margrethe Vestager.

Tax advantages given only to selected multinational companies harm fair competition in the EU, commented Margrethe Vestager, EU Executive Vice-President for a Europe fit for the Digital Age, following the EU General Court judgments of Wednesday on the Amazon and Engie tax state aid cases in Luxembourg.

The General Court has confirmed the Commission's June 2018 decision that Luxembourg granted illegal State aid to Engie through selective tax breaks, but it annulled the Commission's October 2017 decision that Luxembourg granted illegal State aid to Amazon.

Both judgments confirm once more a key principle: while Member States have exclusive competence to determine their taxation laws, they must do so in respect of EU law, including state aid rules, Vestager stressed.

As regards Amazon in Luxembourg, the Commission's decision concerned a tax ruling issued by Luxembourg to Amazon, by virtue of which three quarters of the profits made from all Amazon sales in the EU went untaxed until 2014.

In October 2017 the Commission found that Luxembourg granted undue tax benefits to Amazon of around €250m, so the company was allowed to pay four times less tax than other local companies subject to the same national tax rules. The EU executive then urged that Luxembourg must recover the illegal aid.

We will carefully study the judgment and reflect on possible next steps, Vestager said.

As regards Engie in Luxembourg, the General Court has confirmed the Commission's decision that a set of tax rulings issued by Luxembourg artificially reduced Engie's tax bill by around €120m. The tax rulings endorsed two financing structures put in place by Engie that treated the same transaction both as debt and as equity, with the result that its profits remained untaxed. The General Court has also confirmed that State aid enforcement can be a tool to tackle abusive tax planning structures that deviate from the objectives of the general tax system.

“We are close to achieving a historic global agreement on the reform of the international corporate tax framework. Moreover, the Commission is in the process of putting forward a proposal for a digital levy, so that companies benefiting from the digital Single Market fairly contribute to the EU budget. We need to seize the momentum to progress towards fair taxation at all levels," the EVP added.

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