Italian Authorities Launch Major Tax Evasion Probe Against Amazon
In a significant development, the Italian tax police, known as the Guardia di Finanza, recently conducted a raid at Amazon's headquarters in Milan. This action is part of a new and extensive investigation into alleged tax evasion by the e-commerce giant, according to a report from Reuters citing two sources with direct knowledge of the matter.
Details of the Investigation and Raid
The investigation focuses on whether Amazon maintained an undisclosed permanent establishment in Italy from 2019 to 2024, which could have obligated the company to pay higher taxes in the country. During the raid, authorities seized computers and other electronic devices belonging to managers. Notably, they confiscated hard drives that store employee emails after they are deleted from Amazon systems every three months, as revealed by sources.
In addition to the Milan headquarters, the tax police searched the homes of seven Amazon managers and the offices of the auditing firm KPMG. It is important to clarify that KPMG is not under investigation; the search occurred because the firm provided opinions on the actions being scrutinized.
Allegations and Legal Proceedings
According to a search warrant reviewed by Reuters, Milan prosecutors have opened an investigation into Amazon EU Sarl, based in Luxembourg, and its director, Barbara Scarafia. They are suspected of failing to declare income. The warrant alleges that Amazon had an official business presence in Italy before August 2024, when it entered into an agreement with Italy's tax agency and began paying taxes there.
A key piece of evidence cited in the warrant involves Amazon EU Sarl firing and then rehiring 159 workers in 2024 alone. These employees were assigned to another Amazon company, which investigators interpret as proof that Amazon was actively conducting business in Italy during that period.
Broader Context of Tax Cases Involving Amazon in Italy
This latest probe is not an isolated incident. In December, Amazon agreed to pay 510 million euros (approximately $605.88 million) to settle a previous tax dispute with Italy's tax collection agency. In that case, Milan prosecutors suspect tax evasion of about 1.2 billion euros for the years 2019 to 2021, with expectations to conclude the investigation early this year, as per a source familiar with the matter.
Furthermore, Italian prosecutors are conducting two other investigations into Amazon. One examines suspected tax evasion for 2021 to 2024, while another focuses on suspected customs and tax fraud related to Chinese imports. These ongoing cases highlight the heightened scrutiny Amazon faces from Italian authorities regarding its tax practices.
The raid and investigations underscore the growing global challenges for multinational corporations like Amazon in navigating complex tax regulations and compliance requirements across different jurisdictions.
