Despite revenues exceeding 51.3 billion euros in 2021, Amazon’s European retail segment recorded a loss of 1.16 billion euros, allowing the company to avoid paying income tax in Europe.
The Luxembourg-based unit also received €1 billion in tax credits, according to company statements seen by Bloomberg.
Amazon EU Sarl generated €43.8 billion in revenue in 2020, which includes revenue from e-commerce businesses in the UK, Italy, France, Germany, Spain, Sweden, in Poland and the Netherlands.
An Amazon representative said Bloomberg that the company was not legally obliged to pay taxes because it had made losses 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.
Amazon’s filing indicates that the 1 billion net tax credit was mainly due to the use of net losses carried forward in accordance with the tax consolidation regime. According to the document, Amazon’s European unit suffered a loss of 37 billion euros due to “raw materials and consumables” and 15 billion euros due to “external charges”, resulting in an annual loss.
The company spokesperson said Amazon had invested more than €100 billion in creating jobs and infrastructure across Europe since 2010.
“Corporate tax is based on profits, not income, and last year Amazon EU Sarl made a loss as we opened over 50 new sites across Europe and created over 65,000 well-paying jobs, bringing our total European permanent workforce to over 200,000,” the spokesperson continues.
European regulators have targeted Amazon in recent years over its tax provisions.
Last year, analysis by trade union Unite found that Amazon declared up to £8.2bn of its UK sales to Luxembourg in 2019, to avoid paying the higher UK tariffs. United.
According to the research, the retail giant reported £13.7 billion in UK sales in its US accounts in 2019, but only reported £5.5 billion in sales in its UK based companies.
The report says Amazon EU Sarl employed just over 4,300 staff in 2019 and had revenues of €32.2bn (£27.3bn), an average of €7.5m. euros (£6.4 million) per employee. This was about 36 times more than the staff of Amazon subsidiaries in the UK.
Questions about Amazon’s tax practices were also raised in May last year, after its Luxembourg company filings showed the company had paid no corporation tax in Europe in 2020, despite record sales revenue. Amazon does not report each country’s revenue and sales in its financial reports.
Amazon EU Sarl’s accounts revealed the Luxembourg unit suffered a loss of €1.2bn (£1bn) and therefore paid no tax. Additionally, the unit received €56m (£47m) in tax credits to offset future tax bills.
Earlier this year, a study commissioned by the grants watchdog group Good Jobs First and the world federation of labor UNI Global Union found that Amazon had received at least $4.7 billion (about £3.5 billion sterling) of grants over the past decade from governments around the world to open new warehouses, offices, data centers and call centers in their jurisdictions.
The company received the majority of the tax benefits – $4.1 billion – for projects in the United States, where the company has 110 distribution centers. Outside the United States, it has received at least $600 million in government grants, in a dozen countries, where the company has aggressively expanded its Amazon Prime and data center networks.
In a major setback to EU efforts to get more taxes from tech giants, Europe’s second-highest court ruled last year that Amazon did not need to pay 250 million euros ( 215 million pounds sterling) of tax arrears in Luxembourg. The European Court overturned a 2017 ruling by the European Commission, which found that a tax deal between Amazon and the Luxembourg government in 2006 amounted to illegal state aid.
The court said European competition regulators failed to prove that Amazon received an unlawful benefit from the tax rulings, adding that the European Commission was wrong on several counts.