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Amazon's fight against $277 million EU tax order kicks off in court on Thursday

Amazon (AMZN.O) will on Thursday seek to overturn an EU order to repay about 250 million euros ($277 million) in back taxes to Luxembourg at Europe’s second-highest court, one of a series of high-profile cases marking the bloc’s crackdown on unfair tax deals.

The European Commission said in its 2017 ruling that the tax deal, which covered the period from May 2006 to June 2014, meant almost three-quarters of Amazon’s business went untaxed.

The EU competition watchdog said the Grand Duchy allowed the U.S. online retailer to shift a significant portion of its profits from a subsidiary to a holding company without paying tax, giving the company an unfair advantage.

At issue was the royalty paid by the subsidiary Amazon EU on certain intellectual property rights to Amazon Europe Holding Technologies, a company which the European Union said had no employees, no offices and no business activities.

Amazon said in its filing to the General Court that the EU had not proven its case, which it claims is riddled with legal and factual errors. The hearing in Luxembourg, of case T-318/18, will run to Friday.

The company said the EU ruling also breached principles of legal certainty, because it relied on a flawed reference framework.

It accused EU enforcers of discrimination by using 2017 OECD guidelines for a tax deal agreed with Luxembourg in 2003. In addition, Amazon said the EU has no case as the 10-year limitation period has expired.

Apple (AAPL.O), Fiat Chrysler Automobiles (FCHA.MI) , Starbucks (SBUX.O) and scores of other multinationals have also been caught in the EU crackdown in recent years over their tax deals with countries in the bloc.

Starbucks won its fight in September last year after the General Court backed its arguments while Fiat Chrysler lost. Apple is still waiting for a ruling.

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