Amazon reached a major tax settlement with Italy by agreeing to pay €100 million ($118 million) to the European country in order to put an end to an investigation of potential back taxes it owes that spanned the majority of this year. According to initial reports on the matter, Italian tax authorities first started suspecting Amazon of evading taxes in early 2017, with their initial estimates reaching up to €130 million ($153 million) in owed back taxes which were evaded in a period between 2011 and 2015.
The Seattle, Washington-based eCommerce giant previously dismissed such allegations and said all of its financial obligations to Italy were paid on time, attributing the low amount of its total taxes in the observed period to major investments in the country that significantly reduced its profits, i.e. the basis for corporate taxes in Italy. The newly agreed settlement was first reported by Reuters that cited a company official who emphasized Amazon's commitment to Italy by stating the firm already injected more than €800 million ($943 million) into the Italian economy since first entering the country in 2010. Amazon's local division also employs more than 3,000 people, the same source said. The development marks the second major tax hit delivered to Amazon on the Old Continent over the course of this year, with the European Commission recently ordering the firm to pay €250 million in back taxes to Luxembourg despite the fact that the landlocked country repeatedly stated it isn't owed anything. That particular case has yet to be resolved as Amazon is still in the process of weighing its options and hasn't decided whether to appeal the decision.
Italy has been particularly aggressive with cracking down on foreign tech giants' tax evasion and avoidance practices in recent times, having already reached an even larger tax settlement with Google earlier this year, with the Alphabet-owned company agreeing to pay $334 million to Rome in order to have its tax avoidance investigation concluded. The European Commission is also presently debating how to conduct a more systematic crackdown on digital companies that are artificially lowering their profits in order to avoid taxes. The currently likeliest option is to start taxing companies like Google and Amazon based on their revenues instead of bottom lines.