FILE PHOTO: Flags flutter outside a distribution centre in Passo Corese, Italy March 22, 2021. REUTERS/Remo Casilli/File Photo
MILAN (Reuters) - Italian prosecutors are investigating e-commerce giant Amazon and three of its executives over alleged tax evasion worth 1.2 billion euros ($1.26 billion), two sources with direct knowledge of the matter said on Friday.
News of the investigation broke last year, but the details over its extent emerged on Friday, first reported by the Italian daily Corriere della Sera.
Amazon said in an emailed statement to Reuters it would not comment on ongoing investigations.
"Amazon is committed to complying with all applicable tax laws", the company said, stressing it was among Italy's top 50 tax contributors, with its tax bill for the country exceeding $1.4 billion in 2023.
Milan prosecutors and tax police placed the three managers and Amazon's Luxembourg-based European unit under investigation for tax fraud in online sales in Italy during 2019-2021, the sources said on Friday.
They said the bill for Amazon could rise to 3 billion euros, taking into account penalties and interest.
According to the sources, Amazon's algorithm allows it to sell in Italy goods from non-EU sellers, mostly Chinese, without disclosing their identity, helping them avoid paying Italian value-added tax (VAT).
Under Italian law, an intermediary offering goods for sale in Italy is co-responsible for the non-payment of VAT by non-EU sellers that use its e-commerce platform.
If the allegations stand up in court, they could pose a threat to Amazon's business model across Europe, since VAT is a harmonised European tax, the two sources said.
The investigation, which started in 2021, resulted from routine checks carried out by tax police in an area north of Milan, the two sources said. They could not be named because they were not authorised to speak publicly on the issue.
In another case, Italian tax police in July 2024 seized approximately 121 million euros from an Italian unit of Amazon as part of an investigation into alleged tax fraud and illegal labour practices that is ongoing.
Milan prosecutors accused the logistics unit Amazon Italia Transport of circumventing labour and tax laws, relying on cooperatives or limited liability companies that supplied workers while omitting VAT duties and reducing social security payments.
In response Amazon said at the time that it had respected the necessary rules.
($1 = 0.9555 euros)
(Reporting by Emilio Parodi, editing by Alvise Armellini, Barbara Lewis and Alistair Bell)
