An advisor to the European Union Court of Justice (CJEU) has said that Amazon should not have to pay €250 million in back taxes to Luxembourg in a blow to the bloc’s attempts to crackdown on preferential deals in the bloc.

The European Commission in 2017 said that Amazon paid no taxes on almost three-quarters of its profits from EU operations due to a Luxembourg tax arrangement allowing it to channel profits to a holding company tax-free.

The European Securities and Markets Authority (ESMA) equated the tax deal to illegal state aid, a decision which was subsequently scrapped by a lower tribunal in 2021.

In this story’s latest wrinkle, advocate General Juliane Kokott at the CJEU has published a non-binding opinion which criticised the European Commission's judgement. She wrote: “The Commission erred in deciding that Luxembourg had granted unauthorised state aid to Amazon in the form of tax advantages.

"The reference system relied on by the Commission in order to review whether there was a selective advantage, namely the OECD Transfer Pricing Guidelines rather than Luxembourg law, was incorrect.”

Kokott added that the General Court’s judgement annulling the EU decision should be upheld. The CJEU typically follows these kinds of recommendations in 80 per cent of cases and will make a final decision in the coming months.

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