Ashurst successfully represents the Luxembourg Government in Amazon tax ruling appeal
14 December 2023
Global law firm Ashurst has successfully advised the Luxembourg Government in relation to the judgement of the EU Court of Justice (the "Court") handed down on 14 December 2023 in the Amazon tax ruling case.
On 12 May 2021, the EU General Court annulled the Commission's decision finding that Luxembourg granted State aid to Amazon through tax rulings. The Commission appealed the case before the Court. In today's judgment, the Court rejects the Commission's appeal and confirms that the tax treatment of Amazon does not involve State aid. In the wake of the recent Fiat and Engie judgments, the Court confirms that Member States are exclusively competent to define their national tax rules and that this should be the starting point to any State aid analysis in the tax field. By contrast, parameters and rules external to the national tax system cannot be taken into account. In the area of transfer pricing, this means that the Commission cannot rely on an autonomous arm's length principle. Instead, it is required to ascertain whether such principle is expressly incorporated under national law and if so, how it is applied under national rules. Equally, the Commission cannot rely on OECD guidelines on transfer pricing – which are a non-binding international document - unless national law makes express reference to them.
This judgment follows the judgment of the Court's Grand Chamber in the Fiat and the Engie cases, where Ashurst also successfully represented the Luxembourg Government.
These judgments are significant as they greatly limit the Commission's powers under EU State aid rules to review tax rulings granted to multinationals and more generally national fiscal measures.
The Ashurst team in the Amazon case was led by Brussels competition partner Denis Waelbroeck and associates Jessica Bracker and Hélène Fricaudet.
On 12 May 2021, the EU General Court annulled the Commission's decision finding that Luxembourg granted State aid to Amazon through tax rulings. The Commission appealed the case before the Court. In today's judgment, the Court rejects the Commission's appeal and confirms that the tax treatment of Amazon does not involve State aid. In the wake of the recent Fiat and Engie judgments, the Court confirms that Member States are exclusively competent to define their national tax rules and that this should be the starting point to any State aid analysis in the tax field. By contrast, parameters and rules external to the national tax system cannot be taken into account. In the area of transfer pricing, this means that the Commission cannot rely on an autonomous arm's length principle. Instead, it is required to ascertain whether such principle is expressly incorporated under national law and if so, how it is applied under national rules. Equally, the Commission cannot rely on OECD guidelines on transfer pricing – which are a non-binding international document - unless national law makes express reference to them.
This judgment follows the judgment of the Court's Grand Chamber in the Fiat and the Engie cases, where Ashurst also successfully represented the Luxembourg Government.
These judgments are significant as they greatly limit the Commission's powers under EU State aid rules to review tax rulings granted to multinationals and more generally national fiscal measures.
The Ashurst team in the Amazon case was led by Brussels competition partner Denis Waelbroeck and associates Jessica Bracker and Hélène Fricaudet.
