The Italian prosecutor’s office is investigating e-commerce giant Amazon (AMZN.O) and three of its executives over the potential tax evasion amounting to 1.2 billion euros ($1.26 billion), two sources familiar with the matter said on Friday.
News of the investigation emerged last year, but the details of its scale only became known on Friday. The first to report on this was the Italian newspaper Corriere della Sera.
Amazon did not immediately respond to a request for comment and has not made an official statement regarding the investigation.
The Milan prosecutor’s office and the tax police are investigating the activities of three managers and Amazon’s European unit in Luxembourg in connection with suspected tax fraud in online sales in Italy between 2019 and 2021.
According to sources, the total tax liability for Amazon could rise to 3 billion euros, including penalties and interest.
Amazon's algorithm allows the company to sell goods in Italy from sellers outside the EU, primarily from China, without revealing their personal information. This likely helps avoid paying Italian VAT (Value-Added Tax).
Under Italian law, an intermediary offering goods for sale in Italy is responsible for the non-payment of VAT by non-EU sellers if they use its e-commerce platform.
The investigation, initiated in 2021, resulted from routine checks by the tax police in a northern Milan area, the sources said. They wished to remain anonymous as they were not authorized to make public statements on the matter.
In a separate investigation, the Italian tax police in July 2024 seized approximately 121 million euros from Amazon’s Italian unit in connection with a case of suspected tax fraud and illegal labor activity, which is ongoing.
These investigations could have serious consequences for Amazon, as it not only involves significant fines but also potential changes to tax regulations that could affect the company’s operations in the European market. If the company is found guilty, it could lead to even stricter control of e-commerce in the European Union, particularly regarding tax payment and consumer protection.
Amazon, as one of the largest players in the online sales market, has already faced numerous similar investigations in other countries. However, in Italy, the case holds particular significance due to the strategic role of the country as one of the largest e-commerce markets in Europe. The company could come under pressure from European regulators to improve its tax policy and transparency across all markets.
This situation also raises questions about the effectiveness of existing international agreements on taxing multinational corporations. Meanwhile, if Italian authorities prove their accusations, this will set an important precedent for other European countries, which are also conducting investigations into major corporations conducting online sales via international platforms.