The years pass and look alike for the very poor European subsidiary of Amazon. Amazon EU Sarl, based in Luxembourg since 2003, may combine revenues from e-commerce activity in the United Kingdom, Germany, France, Italy, Spain, Poland, Sweden, and the Netherlands, it continues to incur losses. Suddenly, she does not pay income tax, a stroke of luck!
Year after year, Amazon plays the same circus
In 2020, many imagined that Amazon had had an exceptional year in Europe, with a turnover of 44 billion euros, up 36% thanks to the Covid. And yet, the subsidiary recorded a loss of 1.2 billion euros. In 2021, again, Amazon’s turnover jumped another 17%, to reach 51.3 billion euros. Again, a loss of 1.16 billion euros.
The annual loss would be linked to 37 billion euros of “raw materials and consumables” and 15 billion of “external expenses”. These bad figures allow Amazon to escape taxes, as a company spokesperson explains to Bloomberg“ Corporate tax is based on profits, not income, and last year Amazon EU Sarl made a loss as we opened over 50 new sites in Europe and created over 65,000 jobs well paid, bringing our total permanent European workforce to over 200,000 “.
With “Buy with Prime” Amazon turns into a carrier
The e-commerce giant puts its investments forward every year, to avoid being criticized too strongly for its tax optimization practices. Amazon says invest massively in the creation of jobs and infrastructures across Europe – more than 100 billion euros since 2010 “.
The company also ensures that it pays a few coins to the European countries that host it, ” In Europe, we pay corporate taxes amounting to hundreds of millions of euros “. But above all, it benefits from the very advantageous Luxembourg tax system, the tax advantage amounted to one billion euros in 2021, “ mainly due to the use of net losses carried forward in accordance with the tax consolidation system “.
Is the global tax really the panacea?
Amazon still has a 250 million euro dispute pending with the European Commission. The latter believes that Luxembourg, where 6,899 employees are based, has provided the company with illegal state aid. The General Court of the European Union annulled this decision in May 2021, the case is now before the Court of Justice of the Union.
Amazon is far from the only multinational, American or European, technological or not, to engage in such tax practice. A global minimum corporate tax must be introduced to limit this type of practice. Such an agreement takes time and requires compromises that limit its scope.