Corporations trying to avoid taxes is nothing new, in fact, you’d be hard-pressed to find a multi-billion dollar company that doesn’t have a few tax avoidance schemes going. When operating in Europe, funneling revenue through Luxembourg is a popular way for companies like Amazon to avoid paying higher taxes elsewhere in the continent, but a recent crack down by the European Commission on such schemes is making things difficult. In response to the investigations into its tax practices, Amazon has decided to finally start paying real sales taxes in a handful of European countries.
Amazon has decided to finally start paying sales tax in individual European countries, amid an investigation into the way the company had previously sent most of its revenue through tax haven Luxembourg. From May 1st this year, Amazon begun reporting its revenue and paying direct sales tax in the UK, Germany, Italy, and Spain. It’s not clear if Amazon will pay tax in other European countries it operates in, such as France, but it’s a step in the right direction that will certainly result in a significantly higher tax bill for the company. Previously, Amazon avoided paying sales tax in European countries by funneling all revenues through Luxembourg under an agreement that sees it pay a miniscule amount of tax in the country. This tax avoidance scheme is similar to ones implemented by Apple, Google and others, which has recently prompted anti-trust investigations by the European Commission. The European Commission’s ongoing investigation into Amazon’s tax deals has so far led investigators to believe that the deal gives the company an illegal, unfair advantage over competitors. Amazon may have started paying tax in some European countries as a reponse to these findings, although the company hasn’t confirmed this is the case.