Italian authorities are investigating e-commerce giant Amazon for allegedly evading €1.2bn ($1.26bn) in taxes.
The probe, which began in 2021, focuses on the company’s operations in Italy between 2019 and 2021.
Initial reports surfaced in 2024.
But the full scale of the inquiry was revealed only recently through a report by Italian newspaper Corriere della Sera.
The Allegations: A Complex Tax Evasion Scheme
The investigation centers on Amazon’s platform and its involvement in facilitating sales from non-EU sellers, primarily Chinese, who allegedly bypass Italian tax regulations.
Key points of the investigation include:
- Evading VAT: Italian tax law holds intermediaries like Amazon responsible for VAT non-payment by non-EU sellers. The investigation suggests Amazon’s algorithm enables non-EU sellers to evade Italian VAT, which is currently set at 22%.
- Lack of Transparency: The absence of clear identification of these non-EU sellers is believed to be a crucial factor in the evasion scheme. The lack of transparency could lead to severe legal consequences for the company.
As the investigation progresses, financial repercussions for Amazon could increase significantly. Experts suggest penalties, interest, and back taxes could escalate the total amount to around €3bn.
Amazon’s Response to the Allegations
Amazon has denied any wrongdoing, insisting it adheres to all applicable tax laws. In a statement, the company emphasized:
- Tax Contributions: Amazon pointed out that it is one of Italy’s top 50 taxpayers, having paid over $1.4bn in taxes in 2023 alone.
- Commitment to Compliance: The company reiterated its commitment to ensuring full compliance with tax laws, asserting that it works closely with local authorities to maintain transparency in its operations.
Despite its defense, the case has garnered significant attention, especially as it could affect the company’s operations in Italy and beyond.
Financial Impact and Penalties
While the investigation focuses on the years 2019-2021, the potential impact on Amazon is substantial:
- Possible Penalties: If found guilty of tax evasion, Amazon could face penalties that could total up to €3bn, including fines and interest on the unpaid taxes.
- Subsidiary Under Scrutiny: In a separate development, Italian tax police recently seized €121m from an Amazon subsidiary in Italy over allegations of tax fraud and illegal labor practices.
These actions highlight the seriousness of the investigation and the potential legal challenges the company could face in Italy.
Broader Implications for Amazon in Europe
The outcome of this investigation could have far-reaching consequences for Amazon’s operations across Europe.
Under EU law, tax evasion by non-EU sellers on online platforms is a growing concern.
If Amazon is found responsible for facilitating VAT evasion, it could face increased scrutiny across the continent.
Amazon’s role as a key intermediary in global e-commerce means that the case could set a precedent for future regulatory actions against other major online platforms.
The investigation also raises questions about the extent to which tech giants like Amazon should be held accountable for the activities of third-party sellers on their platforms.
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Amazon’s Expansion Amid Investigation
Despite the ongoing legal troubles, Amazon is continuing to expand its presence in Italy.
The company recently opened its first physical retail store in Milan on February 12, 2025.
This move marks a new chapter for Amazon, even as it grapples with the fallout from the ongoing investigation.
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Key Takeaways
- Tax Evasion Allegations: Amazon is under investigation for allegedly helping non-EU sellers evade VAT in Italy, with €1.2bn in taxes at stake.
- Possible Penalties: The financial impact on Amazon could rise to €3bn, including penalties and interest.
- Amazon’s Response: The company denies any wrongdoing and stresses its compliance with tax laws.
- European Implications: The case could have broader ramifications for operations in Europe and other tech giants.
As the investigation continues, the scrutiny on the firm’s European operations is likely to intensify, with major consequences for the e-commerce giant’s business model across the continent.
