Milan prosecutors have requested a criminal trial for Amazon's European unit and four managers over alleged VAT evasion worth 1.2 billion euros, despite Amazon having already paid 527 million euros to settle the tax dispute in December. This move is unprecedented in Italy, as criminal probes are typically closed after such a settlement.
The core allegation is that Amazon's algorithm and operating models enabled tens of thousands of non-EU sellers, mostly Chinese, to sell goods in Italy without disclosing their identity, thereby avoiding VAT payments for which Amazon is jointly responsible.
A judge will now decide whether to indict the defendants, and if upheld, the case could threaten Amazon's business model across Europe. This is one of several ongoing investigations into Amazon's operations in Italy, including probes by the European Public Prosecutor's Office and other Milan prosecutors.
Main topics: Italian tax evasion case against Amazon, unprecedented criminal prosecution post-settlement, alleged VAT-avoidance algorithm for non-EU sellers, potential threat to Amazon's European business model, multiple ongoing investigations in Italy.
Milan prosecutors have requested trial for Amazon's European unit and four of its managers over alleged tax evasion worth around 1.2 billion euros ($1.38 billion), two sources with direct knowledge of the matter said on Thursday.
The move is unprecedented for a case of this kind in Italy, as Amazon âagreed in December â to pay â 527 million euros, including interest, to Italy's Revenue Agency to settle the tax dispute.
In all previous cases involving other international groups, once âa settlement was reached and payment made, prosecutors closed related criminal investigations, either through plea deals or by dropping the âcases.
This time, however, Milan prosecutors did not share the tax authority's approach and decided to press ahead with their probe, leading to a request that the suspects be sent to trial.
Amazon was not immediately available âfor comment.
After the tax settlement in December, the U.S. tech giant said â it would "forcefully âdefend its position on the potential ungrounded criminal case".
"Unpredictable regulatory environments, disproportionate penalties, and protracted âlegal proceedings are âincreasingly affecting Italy's attractiveness as an investment destination", it added.
A judge will now set â a date for a preliminary hearing to decide whether to indict the âdefendants or dismiss the case.
"VAT-AVOIDANCE ALGORITHM"
Milan prosecutors and tax police had placed the four managers and Luxembourg-based Amazon EU Sarl under investigation for alleged VAT evasion on online sales in Italy between 2019 and 2021.
According to charges seen by Reuters, Amazon's algorithm and operating models enabled the sale in Italy of goods from tens of thousands of non-EU sellers - mostly Chinese - without disclosing their identity, helping them avoid paying value-added tax (VAT).
Under Italian law, an intermediary offering goods for sale in Italy is jointly responsible for âunpaid VAT by non-EU sellers operating through its platform.
In their request for trial, Milan prosecutors named the Italian Economy Ministry as the offended party.
If upheld in court, the allegations âcould pose a âthreat to Amazon's business model â across Europe, as VAT is a harmonised EU tax, the two sources said.
This is one of several cases involving the company in Italy.
The European Public Prosecutor's Office (EPPO) is investigating similar alleged offences for the period 2021-2024.
Milan âprosecutors are also running two additional probes: one into alleged customs and tax fraud involving Chinese imports, and another into whether Amazon had an undeclared permanent establishment in Italy between 2019 and 2024 and should therefore have paid more taxes in the country.
Separately, on February 24, Italy's privacy watchdog ordered a local Amazon unit to stop using the personal data of more than 1,800 employees at a warehouse north-east of Rome.
($1 = 0.8669 euros)
The move is unprecedented for a case of this kind in Italy, as Amazon âagreed in December â to pay â 527 million euros, including interest, to Italy's Revenue Agency to settle the tax dispute.
In all previous cases involving other international groups, once âa settlement was reached and payment made, prosecutors closed related criminal investigations, either through plea deals or by dropping the âcases.
This time, however, Milan prosecutors did not share the tax authority's approach and decided to press ahead with their probe, leading to a request that the suspects be sent to trial.
Amazon was not immediately available âfor comment.
After the tax settlement in December, the U.S. tech giant said â it would "forcefully âdefend its position on the potential ungrounded criminal case".
"Unpredictable regulatory environments, disproportionate penalties, and protracted âlegal proceedings are âincreasingly affecting Italy's attractiveness as an investment destination", it added.
A judge will now set â a date for a preliminary hearing to decide whether to indict the âdefendants or dismiss the case.
"VAT-AVOIDANCE ALGORITHM"
Milan prosecutors and tax police had placed the four managers and Luxembourg-based Amazon EU Sarl under investigation for alleged VAT evasion on online sales in Italy between 2019 and 2021.
According to charges seen by Reuters, Amazon's algorithm and operating models enabled the sale in Italy of goods from tens of thousands of non-EU sellers - mostly Chinese - without disclosing their identity, helping them avoid paying value-added tax (VAT).
Under Italian law, an intermediary offering goods for sale in Italy is jointly responsible for âunpaid VAT by non-EU sellers operating through its platform.
In their request for trial, Milan prosecutors named the Italian Economy Ministry as the offended party.
If upheld in court, the allegations âcould pose a âthreat to Amazon's business model â across Europe, as VAT is a harmonised EU tax, the two sources said.
This is one of several cases involving the company in Italy.
The European Public Prosecutor's Office (EPPO) is investigating similar alleged offences for the period 2021-2024.
Milan âprosecutors are also running two additional probes: one into alleged customs and tax fraud involving Chinese imports, and another into whether Amazon had an undeclared permanent establishment in Italy between 2019 and 2024 and should therefore have paid more taxes in the country.
Separately, on February 24, Italy's privacy watchdog ordered a local Amazon unit to stop using the personal data of more than 1,800 employees at a warehouse north-east of Rome.
($1 = 0.8669 euros)
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