The European Court of Justice has ruled that the EU competition authority had “not established” that a tax ruling granted by Luxembourg to Amazon was illegal state aid.

In 2017, the European Commission said that Luxembourg’s tax treatment of two Amazon subsidiaries was a sweetheart deal not permitted under EU rules, ordering the grand duchy to collect €250m in back taxes. Both Amazon and the Luxembourg government successfully challenged the commission’s decision at the EU General Court in 2021, with Brussels appealing that judgement to the EU’s top court, the ECJ, based in Kirchberg.

On Thursday, ECJ judges the commission had made legal and procedural errors, including that it had “wrongly determined the ‘reference system’, which is the first step in analysing a national measure in order to be able to categorise it as state aid.”

Following the ruling, the Bloomberg news agency the commission has stating that it would have to “carefully study” the ECJ’s judgement and “assess its implications”. Amazon said that the judgement showed the e-commerce giant had “followed all applicable laws and received no special treatment,” according to Bloomberg.

In a statement, Luxembourg’s finance ministry pointed out the Amazon decision followed similar ECJ rulings against the European Commission in the and cases.

The finance ministry stated that even “if Luxembourg tax rules have essentially changed since the events which gave rise to the European Commission’s investigations in these cases, the judgments of the highest court in the EU provide essential clarifications on the analysis framework that the European Commission must apply in its investigations relating to state aid in tax matters, and are therefore important in providing legal certainty to tax administrations and taxpayers within the internal market.”

The decision is final and cannot be appealed.

The case is , Commission v. Amazon.com and Others.