Economy & Politics

Decision expected on Luxembourg tax rebates

European justice rules Wednesday on tax exemptions granted by Luxembourg to the online sales giant Amazon and to the energy company Engie, pinned as illegal state aid by Brussels which ordered the reimbursement.

European justice rules Wednesday on tax exemptions granted by Luxembourg to the online sales giant Amazon and to the energy company Engie, pinned as illegal state aid by Brussels which ordered the reimbursement.

(AFP) – Did Amazon or Engie benefit from an illegal tax advantage? This May 12, European justice will decide this question. These disputes are part of a broad campaign by the European Commission against tax evasion by multinationals within the EU. Investigations have been opened in recent years under the pressure of the revelations of the LuxLeaks scandal in 2014 and then of the Panama Papers in 2016.



The Luxembourg government has decided to appeal the decision of the European Commission in the Engie case.


This crusade has so far had mixed results. In a dispute with the IT group Apple, the Commission suffered a resounding setback last summer, with European judges overturning its decision to reimburse Ireland 13 billion euros in tax benefits it deemed undue .

For Amazon and Engie, the sums at stake are less. The American e-commerce giant was summoned in October 2017 to repay 250 million euros to Luxembourg. Brussels estimates that it benefited from illegal advantages, thanks to an agreement of 2003 (renewed in 2011) allowing it to evade the tax on nearly three quarters of its profits in this country which shelters its European seat.

Dubious financial arrangements

In June 2018, the European executive ordered Luxembourg to recover 120 million euros from Engie, questioning dubious financial arrangements that allowed the French energy company to escape tax on 99% of profits generated by two of its subsidiaries located in the Grand Duchy.

Contesting any illegal practice, Luxembourg, Amazon and Engie had taken the matter to European justice. Judges at the EU court are due to deliver their decision on Wednesday morning.


Wi, Bank classification .Finanzplatz, BCEE Spuerkees. Luxemburg.Foto: Gerry Huberty / Luxemburger Wort

Conducted by 16 international media and the Organized Crime and Corruption Reporting Project, the investigations focus on the analysis of four million documents from the commercial register and the register of beneficial owners of the Grand Duchy.


The different parties will be able to appeal to the Court of Justice of the European Union (CJEU), as the European Commission did after its defeat against Apple in the first instance.

The American coffee chain Starbucks also won its case in September 2019 at first instance against Brussels, which had forced it to pay 30 million euros in arrears of tax to the Netherlands.

On the other hand, the Italian car manufacturer Fiat had failed with the same European judges to annul a decision relating to the same amount in Luxembourg.

Avoid distortions in Europe

The extremely favorable tax treatment of large companies by certain EU states, such as Belgium, Ireland, Luxembourg and the Netherlands, has been denounced by NGOs for many years. These countries are accused of seeking to secure investments and jobs on their soil, at the cost of dumping which fuels a fall in tax revenues in Europe and creates distortions of competition between companies.

Whatever the outcome of the ongoing proceedings, the issue could soon be resolved by the international tax revolution promoted by the US administration. President Joe Biden does indeed want a minimum global corporate tax. A reform in this direction is being negotiated under the aegis of the Organization for Economic Co-operation and Development (OECD). If successful, it would raise more taxes and resolve distortion issues within the EU.


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