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Italian Authorities Investigate Amazon Over Alleged Tax Fraud
Latest Developments in the 2025 Amazon Tax Investigation
Italian prosecutors have launched a comprehensive investigation into e-commerce giant Amazon (AMZN.O) and three of its top executives over alleged tax evasion amounting to 1.2 billion euros ($1.26 billion), according to sources familiar with the matter.
The probe, initially reported in 2024, has now revealed deeper implications for Amazon’s business practices, particularly in relation to value-added tax (VAT) fraud on sales conducted in Italy from 2019 to 2021.
Key Allegations Against Amazon
Milan prosecutors, along with Italy’s tax police, are investigating Amazon’s Luxembourg-based European unit for facilitating VAT fraud in Italy. According to sources, Amazon’s algorithm enables the sale of goods from non-EU sellers—mainly from China—without properly disclosing their identities, allowing them to evade VAT obligations in Italy.
Under Italian tax law, digital platforms that facilitate third-party sales are co-responsible for VAT compliance. If the allegations hold up in court, Amazon could face serious financial and operational repercussions not only in Italy but across Europe, given that VAT regulations are harmonized across EU nations.
Potential Financial Penalties for Amazon
Authorities estimate that the final bill for Amazon, including penalties and interest, could soar to 3 billion euros ($3.15 billion). If proven guilty, the company could be forced to revise its European business model, leading to significant financial and regulatory adjustments.
Amazon’s Response
In a statement to Reuters, Amazon declined to comment on the ongoing investigation but emphasized its commitment to complying with all applicable tax laws. The company highlighted its significant contribution to the Italian economy, stating that its total tax bill in Italy exceeded $1.4 billion in 2023, making it one of the country’s top 50 taxpayers.
Broader Legal Challenges for Amazon in Italy
This investigation is not Amazon’s first run-in with Italian tax authorities. In July 2024, Italian tax police seized 121 million euros from Amazon’s local logistics subsidiary, Amazon Italia Transport, as part of a separate probe into alleged tax fraud and illegal labor practices.
According to Milan prosecutors, Amazon Italia Transport allegedly circumvented labor and tax laws by outsourcing operations to cooperatives and limited liability companies, which in turn failed to pay VAT and reduced social security contributions.
Amazon responded by asserting that it had fully complied with the required legal frameworks at the time.
What’s Next for Amazon?
The outcome of these investigations could have far-reaching implications for Amazon’s European operations. If the Italian courts uphold these allegations, regulators across the European Union may impose stricter compliance measures on international e-commerce giants.
Key Takeaways for Businesses & Consumers
- For businesses: Companies operating in the EU must closely monitor VAT compliance and intermediary liabilities.
- For consumers: Buyers should remain aware of potential regulatory changes that may affect pricing and availability of goods sold by non-EU vendors on major e-commerce platforms.
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