On 8 November 2021, the appeal brought on 22 July 2021 by the European Commission against the judgment of the General Court of the European Union in the Amazon State aid case was published in the Official Journal of the European Union. The appeal was made following the 12 May 2021 judgment of the General Court annulling the Commission's 2017 decision that Luxembourg granted illegal State aid (a selective advantage) to Amazon through a tax ruling that basically allowed Amazon to deduct excessive royalty expense in Europe without the royalty income being taxed.

The pleas in law and main arguments are as follows:

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Pleas in law and main arguments

The Commission puts forward two grounds of appeal against the judgment.

First ground of appeal: the General Court, in rejecting the Decision's (1) primary finding of advantage, infringed Article 107(1) TFEU, failed to state reasons, breached procedural rules and distorted the Decision. This ground of appeal is divided into two parts:

— First part: In paragraphs 162 to 251 of the judgment, the General Court erred in rejecting the Decision's functional analysis of Amazon Europe Technologies SCS ('LuxSCS') and its selection of LuxSCS as the tested party on the basis that LuxSCS held legal ownership of the Intangibles, made them available to Amazon EU S.à.r.l ('LuxOpCo'), and participated financially in their development. In so doing, it misinterpreted and misapplied the arm's length principle, which constitutes an infringement of Article 107(1) TFEU in relation to the condition of advantage, and failed to state reasons, due to contradictory and inadequate reasoning. The General Court also improperly invoked arguments on its own motion to reject the Decision's selection of LuxSCS as the tested party on the basis that there were no comparable independent companies with which to apply the transactional net margin method ('TNMM') to LuxSCS. In so doing, the General Court exceeded its competence of judicial review, which constitutes a breach of procedure and a breach of the Commission's rights of defence, and distorted the Decision.

— Second part: In paragraphs 257 to 295 of the judgment, the General Court erred in rejecting the Decision's calculation of the arm's length royalty due by LuxOpCo to LuxSCS on the basis that LuxSCS, as tested party, should have been entitled to the market value of the intangibles assets under licence and that LuxSCS did not perform low-value adding services. In so doing, the General Court misinterpreted and misapplied the ALP, breached procedural rules, distorted the Decision, and failed in its duty to state reasons.

Second ground of appeal: the General Court, in rejecting the Decision's first subsidiary finding of advantage, erred in the standard of proof for a finding of advantage, infringed Article 107(1) TFEU, failed to state reasons, and breached procedural rules. This ground of appeal is divided into three parts:

— First part: While the General Court endorsed the correct standard of proof for a finding of advantage in paragraphs 310 and 513 of the judgment, it actually applied a different, stricter standard to reject the Decision's first subsidiary finding of advantage in paragraphs 503 to 538 of the judgment. In so doing, the General Court erred in the standard of proof for a finding of advantage and failed to state reasons due to contradictory reasoning.

— Second part: In paragraphs 314 to 442 of the judgment, the General Court erroneously invoked functions performed by U.S.-based Amazon Group entities in support of its conclusion that the Commission exaggerated the complexity of functions performed by LuxOpCo in relation to the intangible assets under licence. It also failed to provide reasons why it considered the functions performed by LuxOpCo in relation to the Amazon brand and in relation to Amazon's European retail and service business not to be unique. In so doing, the General Court misinterpreted and misapplied the ALP, which constitutes an infringement of Article 107(1) TFEU in relation to the condition of advantage, and failed to state reasons due to inadequate reasoning.

— Third part: In paragraphs 499 to 537 of the judgment, the General Court improperly invoked arguments on its own motion to reject the Decision's first subsidiary finding of advantage on the basis that the Commission's reliance on the profit split method with a contribution analysis does not demonstrate that the tax ruling necessarily leads to an advantage. In so doing, the General Court exceeded its competence of judicial review, which constitutes a breach of procedure and a breach of the Commission's rights of defence.