Amazon changes tax practices in Europe as investigations continue as investigations continue
NEW YORK, May 24 (Reuters) – Amazon.com Inc (AMZN.O) has started booking revenue from retail sales in individual European countries, instead of channeling all sales through low-tax Luxembourg, the Wall Street Journal reported Sunday.
Under international tax rules, this means Amazon EU Sarl will now have to pay tax in those countries on the share of its profits generated by the branches.
The change was made effective May 1, a company spokesman told the Journal. Amazon said it had started preparing to diversify its retail sales structure two years ago, the Journal reported.
Amazon did not respond to email or phone requests for comment.
The change at the e-commerce company has come amid greater scrutiny of corporate tax avoidance on both sides of the Atlantic in recent years.
European Union antitrust regulators opened an investigation into Amazon’s tax-minimising arrangements with Luxembourg in October. The investigation focuses on whether Luxembourg broke EU state aid rules by agreeing to a deal which allows Amazon to operate almost tax-free in Europe.
The EU’s antitrust chief said earlier this month that EU regulators would miss a June deadline to decide whether the tax deals granted by individual member states to Amazon and other companies such as Apple Inc (AAPL.O) and Starbucks Corp (SBUX.O) were legal because they lacked some data.
Luxembourg has faced international criticism following media revelations in November based on leaked documents, dubbed “LuxLeaks,” that detailed its role in helping companies channel profits through the country and pay low tax rates rather than higher rates in states where they did more business.