Italian tax police have initiated a sweeping probe into Amazon and three of its senior executives for potential tax fraud. The investigation, triggered by detailed financial audits in the Milan region, is focused on online sales conducted by third-party merchants outside the European Union on Amazon’s platform between 2019 and 2021. Authorities suspect that VAT on these transactions, totaling around €1.2 billion, was evaded through non-compliance by a significant number of Chinese sellers.
The Scope of the Probe
During the audits, investigators scrutinized seven billion transactions processed through Amazon's Italian marketplace. Findings suggest that an estimated 70 to 80 percent of these sales originated from sellers outside the EU, who allegedly failed to fulfill their VAT obligations. Authorities are now looking into whether Amazon's own algorithms facilitated this process by allowing these sellers to operate in Italy without properly disclosing their identities a practice that may have enabled widespread tax evasion.
Amazon’s Response and Broader Implications
Amazon has responded to the allegations, asserting that it fully complies with all applicable tax rules and highlighting its substantial contribution to the Italian economy, where it paid over $1.4 billion in taxes in 2023. This investigation comes amid a broader regulatory push in Europe, following new e-commerce laws introduced in Italy in 2019 and stricter EU rules in 2021 that hold platforms partly liable for VAT evasion.
Far-Reaching Consequences
If found guilty, Amazon could face fines and interest that might bring its total liability to as much as €3 billion. The case has broader implications, potentially escalating tensions between the United States and the EU over taxation policies. This isn’t the first time Amazon has encountered scrutiny from Italian tax authorities; in July 2024, a separate investigation resulted in the seizure of €121 million from Amazon Italia Transport over tax fraud and labor law violations.
