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Amazon declaring revenues in multiple EU countries

May 26, 2015

Online retailer Amazon has announced it has opened national branches in certain European countries. Previously, all revenue was recorded in Luxembourg, prompting criticism from the European Union.

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Deutschland Wirtschaft Versandhandel Amazon Logistikzentrum in Pforzheim
Image: picture-alliance/dpa

An announcement from Amazon on Tuesday indicates it will be subject to local taxes in several European countries, rather than just within the borders of its current official European base of operations in low-tax Luxembourg.

"More than two years ago we began the process of establishing local country branches of Amazon EU Sarl, our primary retail operating company in Europe," Amazon said in a statement to DW. Amazon EU Sarl is the full legal name for Amazon's European headquarters.

"As of May 1, Amazon EU Sarl is recording retail sales made to customers through these branches in the UK, Germany, Spain and Italy. Previously, these retail sales were recorded in Luxembourg."

The company said it was also working on setting up such an office in France.

In October 2014, the European Commission launched a probe against Amazon to determine whether the company's use of Luxembourg as its European base of operations amounted to tax avoidance. A press release from the Commission in October announcing the investigation said that because of a special arrangement with the country, "most European profits of Amazon are recorded in Luxembourg but are not taxed in Luxembourg." The Grand Duchy of Luxembourg is also under fire for agreeing to these conditions, allowing Amazon to operate in this way.

Ricardo Cardoso, a spokesman for the EU's competition commissioner, Margrethe Vestager, was quoted by the news agency dpa as saying that the ongoing investigation into "the possible advantage that Amazon would potentially have received in the past" would not be affected by the new local offices.

Other similar investigations are underway by the Commission regarding Apple's tax situation in Ireland, that of Starbucks in the Netherlands, and Fiat Chrysler's in Luxembourg.

Reuters reported that in Germany, Amazon paid 11.9 million euros (currently $12.9 million, but more like $16 million using 2014's average exchange rates) in tax on 32 million euros in profit in 2014 but made $11.9 billion in sales to German customers.

A representative of the German Amazon.de platform was quoted by the news agency as saying that corporate tax was based on profit, not revenue, and that "E-commerce is a low-margin business and highly competitive."

mz/msh (dpa, Reuters, AFP)