Italy fines Amazon $131Mn for tax evasion, labor violations
ROME, ITALY—Italian financial police recently announced the seizure of €121 million ($131.1 million) from Amazon‘s Italian operations.
This unprecedented action is part of an investigation into alleged tax evasion and worker exploitation by the e-commerce giant.
Allegations of fraudulent practices
According to the Milan Prosecutors’ Office, Amazon Italia Transport, a logistics unit of Amazon, is accused of using a system known as “labor reservoirs.”
This scheme allegedly involved outsourcing logistics services to other firms and cooperatives, allowing Amazon to pay workers below market rates and evade taxes. The prosecutors’ 94-page order detailed how this system enabled Amazon to avoid paying VAT and social security contributions, thereby reducing its tax liabilities and operational costs.
“The company illegally employed mechanisms for non-existent operations that allowed fraudulent tax bills and worker exploitation,” an official from the Italian financial authorities stated.
Amazon’s defense and compliance claims
In response to the allegations, Amazon issued a statement asserting its compliance with all applicable laws and regulations.
“We comply with all applicable laws and regulations in every country where we operate, and we demand that companies that work with us do the same,” the statement read. Amazon also expressed its willingness to cooperate with the ongoing investigation but did not provide further details.
Broader crackdown on corporate malpractices
This case is part of a broader crackdown by Italian authorities on large corporations suspected of tax evasion and labor law violations. Similar investigations have targeted other major firms, including DHL, UPS, and Lidl. In early July, €84 million ($91 million) was seized from GXO, another logistics company, under similar allegations.
The Milan Prosecutors’ Office has been particularly active in dismantling these complex fraud mechanisms. They have opened more than a dozen investigations into various companies, highlighting the systemic nature of these illegal practices.
Amazon has faced several legal challenges in Italy in recent years. In April, the country’s antitrust regulator fined €10 million ($10.85 million) for limiting consumer choice on its platform. These repeated legal issues highlight the increasing scrutiny multinational corporations are facing in Italy, particularly regarding their labor practices and tax strategies.
