Italian prosecutors are investigating Amazon and three executives for alleged tax evasion totaling 1.2 billion euros ($1.26 billion), as reported on February 14th. The inquiry was initially disclosed earlier, with comprehensive details surfacing in the Italian daily Corriere della Sera.
Amazon declined to comment on the ongoing investigation, emphasizing its commitment to complying with tax laws and highlighting its significant contributions to Italian tax revenue, exceeding $1.4 billion in 2023.
The Milan prosecutors and tax authorities are probing three Amazon managers and the company's European unit based in Luxembourg for tax fraud related to online sales in Italy from 2019 to 2021. The potential financial implications for Amazon, including penalties and interest, could amount to 3 billion euros.
The investigation revealed that Amazon's algorithm facilitated the sale of goods in Italy by non-EU, mainly Chinese, sellers without disclosing their identities—thus potentially bypassing Italian value-added tax obligations.
If proven, the allegations could challenge Amazon's business model in Europe, given the harmonized nature of value-added tax within the EU. The inquiry, initiated in 2021 following routine tax police inspections near Milan, is significant.
In a related development, Italian tax authorities seized assets from Amazon Italia Transport in July 2024, as part of an ongoing investigation into alleged tax fraud and labor violations. Milan prosecutors accused the Amazon unit of circumventing labor and tax regulations by using third-party vendors to supply workers, potentially avoiding VAT obligations and reducing social security contributions.
Amazon indicated compliance with all required regulations amidst the investigation.