An incentive cutting a state levy on gross receipts by 40 percent is a prohibited subsidy that must be removed, a three-judge panel said Monday in Geneva. The tax break, which takes effect when the first 777X is delivered in 2020, gives an unfair advantage to the U.S. planemaker to the detriment of overseas manufacturers, the WTO determined. 

The European Commission said Boeing would gain $5.7 billion from the disputed benefit, while the U.S. company put the value at $1 billion over 20 years. The decision marks the latest twist in a longstanding clash between the U.S. and the European Union over government incentives to ease the heavy costs of developing new jetliners for Chicago-based Boeing and Europe's Airbus Group SE.

The ruling is "an important victory for the EU and its aircraft industry," EU Trade Commissioner Cecilia Malmstrom said in a statement. "We expect the U.S. to respect the rules, uphold fair competition, and withdraw these subsidies without any delay."

Boeing said the WTO rejected six of the seven incentives challenged by the EU and singled out a tax break on future 777X revenue, while allowing the incentive to stay in place for other jetliners the company makes in the Seattle area.