Like Apple and Google before it, Amazon has also decided to conclude an agreement with the Italian tax authorities on the contested matter of tax evasion. The giant headed by Jeff Bezos will pay €100 million into the coffers of the Italian treasury for the years 2011-2015. This is not yet the “web tax” that has been discussed for some time, but it is important to have established the principle that business carried out in Italy should be taxed in this country.
The tax settlement with the Italian Revenue Agency was signed to resolve any potential disputes relating to the tax investigations conducted by the Guardia di Finanza (Financial Guard) and coordinated by the head prosecutor of Milan in relation to tax payments due from the corporation between 2011 and 2015. In addition, the process has been started to conclude advance agreements for the taxation of the company in Italy.
The amounts pertain to both Amazon EU S.ar.l. and Amazon Italia Services s.r.l., two distinct legal entities that in this way have made their permanent establishment in Italy fully explicit. In their announcement of the advance arrangements for the future taxation of Amazon’s business in Italy, the Italian Revenue Agency stressed that it is “confirming its commitment to pursuing a policy of careful fiscal control regarding the operations of web-based multinationals in Italy.”
Having been in the headlines in the past weeks due to the strike at their delivery hub in Castel San Giovanni, Amazon is obviously interested in defusing further conflicts, and they are presenting their cooperation in tax matters as a strategic choice: “In May 2015, to ensure we had the best business structure to serve our customers going forward, we established a local country branch of Amazon EU in Italy, with all retail revenues, expenses, profits and taxes due now accounted for in Italy,” the U.S.-based company said in a statement.
The online retail multinational also confirmed they had “reached an agreement with the tax authorities on historical matters,” and that they “remain focused on providing a great shopping experience for our customers in Italy,” where they “have invested more than €800m since 2010 and created over 3,000 jobs.“
The agreement between Amazon and the tax authorities is a step forward, said Francesco Boccia (PD), chairman of the Italian House of Deputies’ Budget Commission, who has long worked for the introduction of a web tax. “This confirms that the transitional web tax on the books now is working,” he said.
“The excellent work done in recent years by the Guardia di Finanza, by the Milan prosecutor’s office headed by Francesco Greco and by the Revenue Agency, confirms once more that the principle on which the Italian Parliament has worked since 2013 remains sacrosanct: In the age of the digital economy, taxes must be paid in the country where the business is conducted,” Boccia explained. “The agreement with Amazon, which is added to the previous ones, confirms the need for further strengthening of the principles governing the status of permanent establishment of companies operating in Italy and Europe in the digital age. In the coming hours, we will finalize our work on the budget law, with specific proposals aimed at the effects of digital technologies on taxes and market function.”
The web tax is still “transitional” because no system of taxation for online transnational giants has yet been established. However, in the meantime, a norm has been passed in the House of Deputies this year inviting companies to reach an agreement with the tax authority. The precedents are Apple (which has paid €318 million to satisfy all claims for the years 2008-2013) and Google (with €306 million paid for the years 2002 to 2015).
The Unione Consumatori (Consumers’ Union), which is calling on politicians to work on establishing a web tax, also expressed its satisfaction.