Amazon’s Win in $303 Million Tax Fight With EU: Explained (1)

Amazon.com Inc. has won the latest stage in a legal battle with the EU over whether it was given 250 million euros ($303 million) of illegal subsidies by the Luxembourg authorities through a tax ruling.

Wednesday’s judgment—issued by the European Union’s second-highest court—is another loss for the European Commission’s years-long effort to clamp down on past transfer pricing practices—how companies value intercompany transfers— multinational companies have used in Europe.

The Commission has argued favorable tax agreements from some governments have given companies an unfair tax advantage in tax planning. Changes in rules in the EU and worldwide ...