Amazon Fights $2.4 Million Tax Levy on Blank CDs

A European court examines the case of an Austrian copyright-collecting society pursuing the digital retailer.
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Amazon CEO Jeff Bezos

Once upon a time, about 10 years ago, it was commonplace to put movies, music and other content on blank CDs and DVDs. This also was a moment when the entertainment universe was familiarizing itself with the disruption of file-trading, and one vogue idea back in the day was to compensate copyright holders for lost income from piracy by taxing the purchase of recordable media such as MP3 players, cassette tapes and memory cards.

A few countries ran with that idea. Austria was one of them.

Well, Amazon got its bill, and the e-retailer isn't happy. On Thursday, the European Court of Justice addressed the situation after Amazon found itself facing a levy of nearly €1.6 million ($2.4 million) over customer purchases made between 2002 and 2004. A decade later, Amazon is at odds with an Austrian copyright-collecting society that is looking to obtain the money to pass along to artists.

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Unfortunately, the European Court of Justice has offered little clarity.

Amazon challenged whether the private copying levy system set up was indiscriminately applied to recording media regardless of the final use of such media. Blank CDs might have many uses -- not all private, not all harming copyright holders.

The court concludes that EU policy doesn't preclude member states like Austria from making legislation "which indiscriminately applies a private copying levy."

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On the other hand, the court adds that there should be a "right to reimbursement of the levies paid in the event that the final use of those media does not meet the criteria" and further that there should be "a rebuttable presumption of private use of such media."

Got that? Neither do we.

The court doesn't get itself dirty in attempting to figure out the proper way to impose such a broad tax while ensuring it's only applied where meant. That's up to the courts of each nation to verify. Meaning, Amazon's battle over a decade-old tax bill goes back to Austria.

Here's the full ruling, which in fairness, could have lost some of its clarity from the original German.

Twitter: @eriqgardner