Amazon EU paid no income tax on €51 billion of sales in 2021, report
The company says corporation tax is based on profits, not revenues, and last year it made a loss
Despite revenues topping €51.3 billion in 2021, Amazon's European retail segment reported €1.16 billion loss, allowing the company to avoid paying income tax in Europe.
The Luxembourg-based unit also received €1 billion in tax credits, corporate filings seen by Bloomberg showed.
Amazon EU Sarl generated sales of €43.8 billion in 2020, which comprised income from e-commerce activities in the United Kingdom, Italy, France, Germany, Spain, Sweden, Poland and the Netherlands.
An Amazon representative told Bloomberg that the company was not legally required to pay taxes because it made a loss after investing heavily in European infrastructure and jobs.
The spokesperson added that the company pays hundreds of millions of euros in business tax across Europe.
The Amazon filing states that 1 billion net tax credit was primarily due to the use of net losses carried forward in accordance with the tax consolidation system. According to the document, Amazon's European unit had a loss of €37 billion due to 'raw materials and consumables' and €15 billion due to 'external charges,' resulting in an annual loss.
The company spokesperson said that Amazon has invested more than €100 billion in generating employment and infrastructure across Europe since 2010.
"Corporation tax is based on profits, not revenues, and last year Amazon EU Sarl made a loss as we opened more than 50 new sites across Europe and created over 65,000 well-paid jobs, taking our total European permanent workforce to over 200,000," the spokesperson continued.
European regulators have targeted Amazon in recent years over its tax arrangements.
Last year, an analysis by trade union Unite found that Amazon reported up to £8.2 billion of its UK sales in Luxembourg in 2019, to avoid paying the higher rates in the UK.
According to the research, the retail giant declared £13.7 billion in UK sales in its US accounts in 2019, but reported just £5.5 billion in sales in its UK-based firms.
The report said that Amazon EU Sarl employed little over 4,300 employees in 2019 and recorded revenues of €32.2 billion (£27.3 billion) - an average of €7.5 million (£6.4 million) per employee. That was about 36 times higher than staff at Amazon's subsidiaries in the UK.
Questions over Amazon's tax practices were also raised in May last year, after its corporate filings in Luxembourg showed that the company paid zero corporation tax in Europe in 2020, despite record sales income. Amazon does not report income and sales from every country in its financial reports.
Accounts for Amazon EU Sarl revealed that the Luxembourg unit made a €1.2 billion (£1 billion) loss and hence did not pay any tax. Moreover, the unit received €56 million (£47 million) in tax credits to offset future tax bills.
Earlier this year, research commissioned by subsidies watchdog group Good Jobs First and global labour federation UNI Global Union found that Amazon received at least $4.7 billion (about £3.5 billion) in subsidies over the past decade from governments worldwide for opening new warehouses, offices, data centres and call centres in their jurisdictions.
The company received the majority of tax benefits - $4.1 billion - for projects in the United States, where the company has 110 fulfilment centres. Outside the United States, it received at least $600 million in government subsidies, in about a dozen countries, where the company has aggressively expanded its Amazon Prime and data centre networks.
In a major setback to the EU's efforts to get more taxes from tech giants, Europe's second-highest court ruled last year that Amazon need not pay €250 million (£215 million) in back taxes to Luxembourg. Europe's General Court overturned a 2017 decision by the European Commission, which concluded that a tax deal between Amazon and the government of Luxembourg in 2006 amounted to illegal state support.
The court said that the European competition regulators had failed to prove that Amazon received an illegal advantage from the tax rulings, adding that the European Commission was incorrect in several respects.