Amazon.com Inc. has started booking revenue from retail sales in
individual European countries, instead of funneling all sales
through low-tax Luxembourg, amid intense scrutiny of corporate tax
practices in Europe.
The change was made effective May 1, a company spokesman said.
Amazon has so far rolled out the structure, with local branches
booking revenue, in the U.K., Germany, Italy and Spain, according
to a person familiar with the matter.
Amazon's move marks a sea change in its approach to tax in
Europe. Depending on how the company allocates costs, it could
significantly boost the firm's tax bill in many EU countries. It
could also put pressure on other companies to do the same.
A number of tax savings structures by multinationals operating
within Europe are now under greater scrutiny. The EU has opened
several probes of tax deals between companies, including Amazon,
and individual EU countries.
EU regulators investigating Amazon said in January they believed
the tax structure in Luxembourg could provide an illegal and unfair
advantage over competitors.
The probe is one of several into the tax structures of companies
such as Apple Inc. and Starbucks Corp. Representatives for the
companies involved have said they didn't receive special
treatment.
Amazon is also under pressure from other probes in Brussels,
including an antitrust inquiry into e-commerce and an investigation
into online platforms.
Individual countries have also started agitating for more tax to
be paid within their borders.
In France, tax authorities are investigating several U.S.
firms—including Google Inc.— alleging they owe
back taxes. In Google's case, the allegation is that the company
should have been booking revenue in France that it instead had sent
to Ireland.
Google has said it complies with tax laws everywhere it
operates.
The U.K., generally considered more business friendly, also
recently passed a budget that increased taxes for companies deemed
to be aggressively trying to avoid taxes. Amazon said it paid
£4 million ($6.2 million) of taxes in the U.K. on
£449 million of revenue in 2013, according the most
recently available public filings.
Amazon said it had started to lay the groundwork for
diversifying its retail sales structure two years ago.
"We regularly review our business structure to ensure that we
are able to best serve our customers and provide additional product
and services," a company spokesman said.
Write to Lisa Fleisher at lisa.fleisher@wsj.com and Sam
Schechner at sam.schechner@wsj.com
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