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Amazon Germany pays 0.1% tax rate in 2014, funnels sales through low-tax haven

Tue 26 May 2015

E-retail giant Amazon.com’s German branch paid just 11.9 million euros (approx. £8.5 million) in tax last year, equivalent to a 0.1% tax rate considering the company reported $11.9 billion in gross sales in Germany in 2014.

German corporate income tax stood at 29.58% last year which would mean Amazon Germany would have been expected to pay $3.5 billion in tax in 2014.

Amazon.de is the group’s largest and most successful market outside of the U.S., according to its annual sales records. However following investigation it has been revealed that almost all of the company’s German sales and profits were reported from businesses in Luxembourg, a low-tax haven. For example, Amazon.de is funded by payments processed by Luxembourg companies.

Accounts filed last month and made public over the past few weeks show that Amazon.de had profited 32 million euros in 2014 and paid corporate income tax of 11.9 million euros.

“Corporate tax is based on profits, not revenues. E-commerce is a low-margin business and highly competitive, and Amazon continues to invest heavily around the world, which means our profits are low,” said an Amazon.de spokesperson.

Amazon added last week that it had implemented a number of changes across Europe, including in the United Kingdom, Germany, Spain and Italy from May 1st, in order to ensure that future sales would be managed in the countries themselves.

“We review our company structures regularly in order to ensure that we can serve our customers as best we can,” the spokesperson continued.

Tax experts suggested that this new structure would require Amazon to pay more tax in the future.

Amazon has been among many other large international companies facing pressure in Europe over their tax arrangements in lightly taxed countries such as Luxembourg. The EU consumer rights commission is currently investigating tax frameworks involving Apple in Ireland, U.S.-based coffee chain Starbucks in The Netherlands and Italian carmaker Fiat in Luxembourg.

As well as tax complications, Amazon.de has also recently faced criticism over the treatment of its employees. Local unions have organised a series of strikes in protest over pay and other benefits mandated by German law.

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