Italian Authorities Investigate Amazon Over Alleged €1.2 Billion VAT Fraud

Italian authorities have launched an investigation into Amazon.com over alleged tax fraud related to the non-payment of €1.2 billion in value-added tax (VAT). The probe, led by the Italian financial police, focuses on transactions from 2019 to 2021, during which Amazon allegedly failed to remit VAT on behalf of third-party sellers from outside the European Union (EU) who sold goods to customers in Italy. It can be estimated that the total amount could reach €3 billion if penalties are included. The case remains in its preliminary stages at the Milan Prosecutor’s Office, with no formal charges filed against Amazon yet.

AMAZON'S TAX OBLIGATIONS UNDER ITALIAN LAW

Since 2019, Italian law has required e-commerce platforms like Amazon to collect and pay VAT for third-party sellers based outside the EU. Previously, sellers were responsible for handling VAT themselves. This legal shift anticipated an EU-wide reform introduced in July 2021 to standardize VAT collection across digital commerce, ensuring greater transparency and reducing tax losses.

ALLEGATIONS OF CONCEALING SELLER IDENTITIES

According to the prosecutor’s office, Amazon allegedly did not disclose the identities and data of non-European sellers to the Italian Revenue Agency, making it difficult to collect VAT payments. Reports suggest that Amazon’s algorithm facilitates the sale of goods from non-EU sellers—primarily from China—without revealing their identities, potentially allowing them to evade Italian VAT obligations. Under Italian law, an intermediary offering goods for sale in Italy is jointly liable for non-EU sellers using its e-commerce platform to avoid VAT payments.

AMAZON'S RESPONSE TO THE ALLEGATIONS

While Amazon has declined to comment on the ongoing investigation, the company has emphasized its commitment to tax compliance. In 2023, Amazon reportedly paid €1.4 billion in direct and indirect taxes in Italy.

SEPARATE INVESTIGATION INTO AMAZON’S ITALIAN SUBSIDIARY

In a separate case, the Italian tax police seized approximately €121 million from an Italian subsidiary of Amazon in July 2024 as part of an ongoing investigation into alleged tax fraud and illegal labor practices.

THE INVESTIGATION'S BROADER IMPLICATIONS

The probe into Amazon’s VAT payments comes amid rising trade tensions between the United States and the European Union. 

WHY THIS CASE MATTERS:

• Potential regulatory scrutiny for other major e-commerce platforms operating in Europe.

• Increased enforcement of digital tax compliance in EU member states.

• Possible impact on transatlantic trade relations if the case escalates.

SOURCES/ RECOMMENDED READ: 

• Amazon in Italy's crosshairs for alleged €1.2 billion tax evasion - Business24tv.it

• Amazon Faces Italian Tax Fraud Investigation Over €1.2 Billion in Unpaid VAT - Cross-Border E-commerce Magazine

• US Weighs Tariff Response to Foreign Digital Services Taxes