Italian tax authorities investigate Amazon in new tax inquiry, sources report.

Italian Tax Police Investigate Amazon for Tax Evasion

On February 12, Italian tax authorities conducted a search at Amazon’s Milan headquarters as part of an ongoing investigation into potential tax evasion by the company. Two sources familiar with the situation confirmed these developments.

In addition, the Guardia di Finanza tax police also visited the residences of seven Amazon executives and the offices of KPMG, the auditing firm.

This latest inquiry centers on whether Amazon should have paid more taxes in Italy due to having an undisclosed permanent presence from 2019 to 2024.

As of now, Amazon hasn’t provided comments on the situation, and KPMG has also chosen not to speak on the matter.

Prosecutors in Milan have initiated an investigation into Amazon EU Sarl, based in Luxembourg, and its director, Barbara Scaraffia, for allegedly failing to report their income correctly, according to details from a 13-page search warrant.

Attempts to reach Scaraffia’s attorney for a comment were unsuccessful.

The search warrant suggests that Amazon had a permanent establishment in Italy before August 2024 when the company entered into a “cooperative compliance” agreement with Italian tax authorities and began paying applicable taxes.

The investigation indicates that Amazon EU Sarl had fired and subsequently rehired 159 employees at another Amazon entity in 2024, which prosecutors interpret as evidence of a permanent establishment in Italy.

Tax officials have confiscated computers and IT gear from administrators, including hard drives that hold employees’ deleted emails, which are typically removed from Amazon’s systems every three months.

The raid on KPMG was executed because the firm had been involved in advising on practices central to this investigation, though it is not under investigation itself.

This episode is just one in a series of challenges facing Amazon in Italy.

Previously, in December, the company reached an agreement with Italy’s tax authorities to pay 510 million euros (about $605.88 million) to settle one of its tax disputes.

Milan prosecutors are anticipated to finish their investigation into this particular dispute, which involves suspected tax evasion amounting to roughly 1.2 billion euros between 2019 and 2021, early this year, as per sources close to the case.

Additionally, there are two other ongoing investigations into Amazon. One involves tax evasion allegations from 2021 to 2024, while the other pertains to customs duties and tax fraud associated with imports from China.