Amazon Faces Double Tax Fraud Probes In Italy

A unit of Amazon in Italy is being investigated by Milan prosecutors over suspected tax evasion, Reuters reported.

The case is separate to last week’s seizure of 121 million euros (£102m) from a Milan-based Amazon branch for alleged tax fraud and worker exploitation, the news service said, citing unnamed sources.

The latest tax evasion investigation reportedly began in 2021 after routine checks carried out by tax police in an area north of Milan.

It focuses on tax rules regarding the trading of goods within Italy’s borders and internationally, with particular reference to value-added taxes and customs duties, the report said.

Funds seizure

As part of the inquiry national tax authorities and those in the city of Monza north of Milan have been conducting checks on Amazon accounts over the past few years, the report said.

The size of the potential tax evasion has not yet been quantified.

Separately, financial police last Tuesday seized funds from an Amazon unit based in Milan in an investigation over the use of so-called labour reservoirs, in which large companies illegally subcontract logistics services to outside organisations to cut costs and pay less in taxes, the state-run ANSA news agency said.

The order accompanying last week’s seizure said the alleged tax fraud involved the use of an “illicit mechanism of invoices” for non-existent transactions stipulated under false contracts for the supply of labour, leading to the issue and use of false documents.

Milan prosecutors said labour relations were “screened by ‘filter’ companies that in turn made use of several cooperative companies, which systematically omitted the payment of VAT, as well as social security and welfare charges”.

Tax probes

Amazon said in a statement provided to Silicon UK, “We comply with all applicable laws and regulations where we operate, and require companies who work with us to do the same.”

The company said its Supplier Code of Conduct must be followed in order to work with Amazon, and added that it would continue to work with authorities.

Amazon has in the past faced regulatory scrutiny in Italy including a record 1.13bn euro fine in 2021 for allegedly abusing its dominance of the e-commerce logistics market.

Italian authorities have conducted similar investigations into large companies including DHL, Uber and Lidl.

In December Airbnb agreed to pay 576m euros to settle a four-year tax dispute.

The previous month tax authorities seized 779.5m euros from the company as part of a probe into the company’s alleged failure to comply with a 2017 law that obliges landlords to withold 21 percent of their income for tax payments.