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Amazon wins $303 million court fight in blow to EU tax crusade

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Amazon won its fight against an EU order to pay around €250 million ($303m) in back taxes to Luxembourg in another blow to competition chief Margrethe Vestager’s (pictured) crusade against preferential deals, writes Foo Yun Chee.

The bloc failed to show that Luxembourg had given the US online retailer special treatment in violation of state-aid rules, the EU’s General Court ruled on Wednesday.

The victory follows last year’s landmark defeat for Vestager against Apple, which had contested an order that it pay €13 billion ($15bn) in Irish back taxes.

Both Amazon and Apple were targeted by Vestager in a campaign to stamp out tax deals used by EU states such as Ireland, Luxembourg and the Netherlands to attract large companies. The Commission views such agreements as unfair.

“The Commission did not prove to the requisite legal standard that there was an undue reduction of the tax burden of a European subsidiary of the Amazon group,” the Luxembourg-based EU judges said.

Amazon in a statement welcomed the ruling, saying it was in line with its “long-standing position that we followed all applicable laws and that Amazon received no special treatment”.

Vestager said she would examine the ruling before deciding whether to appeal to Europe’s top court.

It wasn’t all bad news for Vestager. In a separate case on Wednesday, French utility Engie lost its appeal against an EU order to pay back taxes of 120 million euros to Luxembourg.

But the spotlight was on the Amazon decision, which was criticised by groups campaigning for higher taxes to be levied on multinationals.

EU's Vestager says to study Amazon tax setback before deciding next stepsAmazon says EU court agrees it had no special Luxembourg tax treatment

“Today’s ruling is a blow,” said Chiara Putaturo, a tax expert with Oxfam EU. “It shows again that case-by-case investigations do not solve large-scale tax dodging.”

The amount at stake in the Amazon decision was tiny compared to the billions of dollars the online retailer earns each quarter but the decision could help other companies in their appeals against the bloc’s tax probes.

Vestager has successfully made Belgium, Ireland, Luxembourg and the Netherlands change their tax ruling practices, and spurred the Organisation for Economic Cooperation and Development (OECD) to aim for a global deal on how multinational companies are taxed.

The OECD said last week that the chances of a global deal had never been higher.

The European Commission in its 2017 ruling, knocked down on Wednesday, said Luxembourg spared Amazon from paying taxes on almost three-quarters of its profits from EU operations by allowing it to channel profits to a holding company tax-free.

In its 2018 decision on Engie, the EU said the arrangement with Luxembourg authorities artificially reduced the company’s tax burden, which meant it paid an effective corporate tax rate of 0.3% on certain profits in Luxembourg for about a decade.

The court sided with the Commission, saying the French utility had benefited from a tax advantage.

The cases are T-816/17 Luxembourg v Commission & T-318/18 Amazon EU v Commission.

($1 = €0.8243)

EU

Sustainable consumption: Six new companies join Green Consumption Pledge

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Six companies from leading sectors have joined the pilot phase of Green Consumption Pledge, the first initiative delivered under the New Consumer Agenda and in synergy with the European Climate Pact, inviting people, communities and organizations to participate in climate action and build a greener Europe. The companies Ceconomy, Engie, Erste Group, H&M Group, Philips and Vėjo projektai Dancer bus will join the initiative, thus committing to accelerate their contribution to a green transition. The pledges have been developed in a joint effort between the Commission and companies. Their aim is to accelerate the contribution of businesses to a sustainable economic recovery and to build consumer trust in the environmental performance of companies and products.

Justice and Consumers Commissioner Didier Reynders (pictured) said: “I welcome the commitments made by those six companies for concrete actions towards greater sustainable production and consumption, beyond what is required by EU law. This determination to step up climate action shows the kind of effort European consumers want to see. By now eleven companies are already participating in the Green Pledge and I am looking forward to even more in the future.” The pilot phase of the Green Consumption Pledge will be completed by 2022, including an evaluation of the functioning of the Pledge.

On 10 June, Commissioner Reynders welcomed the six new companies at an event in which representatives of the European Parliament, of the EU consumer organisations BEUC and Euroconsumers as well as EU business organizations AIM and SMEunited will participate. You can follow the event here. The pledges of the six participating companies will be available on this webpage after the event.

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Sustainable fisheries: Commission takes stock of progress in the EU and launches consultation on fishing opportunities for 2022

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The Commission has adopted the Communication 'Towards more sustainable fishing in the EU: state of play and orientations for 2022'. In line with the European Green Deal objectives, EU fisheries are moving towards more sustainable, supporting the transition towards a healthy and environmentally friendly EU food system and underpinning sustainable sources of revenue for EU fishers, the communication shows. The sector's socio-economic performance remains good, despite the coronavirus crisis, also due to the swift support of the Commission.

The Communication calls for further efforts to protect marine resources, both through maintaining high levels of ambition within the EU and by striving to achieve the same high standard in the work with non-EU countries. Member states, Advisory Councils, the fishing industry, non-governmental organisations and interested citizens are invited to take part until 31 August in a public consultation and express their views on the fishing opportunities for 2022.

Environment, Oceans and Fisheries Commissioner Virginijus Sinkevičius said:  “EU fisheries remain on course towards a still more sustainable use of the sea. And while the pandemic hit our fishing communities hard, it was confirmed that environmental sustainability is the key to economic resilience. The situation in some sea basins requires our particular attention, but also across all our sea basins more must be done to deliver the blue in the Green Deal. I count on everybody to play their full part.”

The 2021 Communication shows that in the North East Atlantic especially, sustainability was almost reached for the stocks managed under the principle of maximum sustainable yield (MSY) - the maximum amount of fish that fishers can take out of the sea without compromising the regeneration and future productivity of the stock.

Healthy stocks further contributed to the sector's socio-economic performance, which thus stayed profitable despite the impacts of the COVID-19 pandemic. Fishing activities were hit hard by the sanitary crisis and landed value of fish is estimated to have decreased by 17% last year compared to 2019. The rapid support that the Commission provided to the sector, in particular through making €136 million of funds available under the European Maritime and Fisheries Fund, has helped in addressing the effects of the pandemic swiftly.

However, to ensure healthy fish stocks for future generations, efforts need to be pursued. In the Atlantic and Baltic Sea, the Commission will propose for next year to further maintain or reduce fishing mortality in line with maximum sustainable yield (MSY) for MSY-assessed stocks and to fully implement management plans that set MSY ranges of mortality. In the Mediterranean and Black Seas, although there has been a slight improvement, exploitation rates are still two times higher than sustainable levels. Strong efforts will therefore be aimed at further implementing the Western Mediterranean multiannual plan and measures adopted by the General Fisheries Commission for the Mediterranean. Further improvements in the Adriatic will feature prominently in the 2022 fishing opportunities.

Member States also need to step up the enforcement and control of compliance with the landing obligation, in particular by using suitable modern control tools, such as remote electronic monitoring systems, which are the most effective and cost-efficient means to control the landing obligation at sea. The Commission will continue working with the European Parliament and Council to reach an agreement on the revised fisheries control system, which can facilitate the use of these tools. Besides, fishers are encouraged to further adopt the use of more innovative and selective gears. The European Maritime, Fisheries and Aquaculture Fund (EMFAF) can help finance such investments.

In its relations with third countries, the Commission will pursue high levels of alignment on fishing opportunities and related measures with high sustainability standards. This will be key to ensuring sustainable exploitation of resources and to achieving a level playing field for the EU industry given the strong interlinkages between fleets in the waters concerned. As regards stocks shared with the UK, the Trade and Cooperation Agreement (TCA) provides a strong basis for managing shared fish stocks sustainably, both in annual consultations on fishing opportunities and through the Specialised Committee on Fisheries.

Background

Every year, the Commission publishes a Communication outlining progress on the situation of fish stocks and launching a wide public consultation on the fixing of annual fishing opportunities for the following year. This Communication assesses the progress made towards sustainable fishing in the EU and reviews the balance between fishing capacity and fishing opportunities, the sector's socio-economic performance and the implementation of the landing obligation. It also sets out the rationale for the proposal on fishing opportunities for the following year.

Next steps

After the consultation, the Commission will in the autumn table its proposals for Fishing Opportunities Regulations for 2022 in the Atlantic, the North and Baltic Seas, as well as the Mediterranean and Black Seas. The proposals take into account the multi-annual plans and are based on scientific advice provided by the International Council for the Exploration of the Sea (ICES) and other independent bodies, as well as the economic analysis provided by the Scientific, Technical and Economic Committee for Fisheries (STECF).

The proposals will also incorporate adjustments resulting from the implementation of the landing obligation. Finally, the Council of Fisheries Ministers of the European Union will discuss the Commission's proposals and establish the allocation of fishing opportunities.

More information

Communication 'Towards more sustainable fishing in the EU: state of play and orientations for 2022'

Questions and Answers

Common fisheries policy (CFP)

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Parliament votes to take Commission to court over inaction on breaches of the rule of law

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Today (10 June), the European Parliament has voted (506 for, 150 against, 28 abstentions) on a resolution paving the way to bring the European Commission to the European Court of Justice for inaction over the rule of law, as called for by the Greens/EFA Group. The EU's Rule of Law Mechanism, which has been in place since 1 January this year, has yet to be triggered by the Commission over breaches of the rule of law that affect the EU's budget. The Parliament voted in March and gave the Commission a deadline of 1 June for the adoption of guidelines and the application of the mechanism. The Commission has missed this deadline and has yet to publish its 'guidelines' on how the mechanism should be triggered.

The resolution highlights that this a 'failure to act' by the EU Commission under Article 265 of the TFEU and is the first step in taking the Commission to court. Terry Reintke MEP (pictured), Greens/EFA negotiator and LIBE rapporteur on the Rule of Law Mechanism, said: "The EU needs a strong basis we can all stand on, which is spelled out in the treaties: democracy, rule of law and fundamental rights. But this is under attack and being dismantled as we speak. Instead of defending European values, the Commission is watching, writing reports and sitting on its hands. The rule of law needs action now. Unfortunately, it's clear from yesterday's debate in Parliament that the Commission doesn't seem to feel the same sense of urgency to act.

"People in Poland, Hungary and elsewhere need to know that the Commission is on their side and will fight for their rights as EU citizens. The Commission should not need pressure to act on defending the treaties, but if they keep refusing to act, pressure is what they will get. We are taking action against the Commission to make them do their job and defend the rights of European citizens. We, as the Parliament, will not allow the Commission to sit idly by as far-right populist governments rip apart the rule of law in Europe."

Daniel Freund MEP, Greens/EFA negotiator on the Rule of Law Mechanism, said: "The Rule of law Mechanism isn't just some shiny souvenir from a hard-wrung struggle in the Council last winter; it's a real tool with real world applications and real sanctions. First the Commission claimed they didn't have the tools to fight the rule of law, but now that we have the tool, it's time to use it. There are clear examples of breaches of the rule of law that are taking place as we speak, without any need for 'guidelines' to start proceedings. Attacks against NGOs, media freedom and 'foundations' set up to avoid scrutiny over the use of EU funds, all are cause for launching action in Hungary alone. These are attacks by Viktor Orbán on our rights, our values and our money as EU citizens.

"Inaction on the rule of law would be tantamount to accepting the fight for democracy is already lost in several member states. In six months, Hungarian citizens will go to the polls and they need to be able to vote under real democratic standards. We must make sure that Orbán isn't using EU money to steal the election, to control media coverage and ensure that the opposition cannot contest the election fairly. We don't have time to wait."

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