An Italian unit of e-commerce giant Amazon has agreed to a massive financial settlement of approximately €180 million ($210 million) with the Italian tax agency, and, critically, has scrapped its proprietary monitoring system for delivery staff.
This decisive move ends a high-profile probe into alleged tax fraud and illegal labor practices, according to sources familiar with the matter on Friday.
The settlement resolves a nearly two-year investigation launched by Milan prosecutors in July 2024. The probe focused on Amazon’s logistics services unit, which was accused of systematically circumventing labor and tax laws by using layers of intermediary companies—specifically cooperatives or limited liability companies—to supply workers.
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This complex structure allegedly masked the true employment relationship, allowing the e-commerce giant to avoid Value Added Tax (VAT) payments and significantly reduce social security contributions across its vast delivery network. The scale of the alleged violation was underscored when Milan prosecutors initially seized €121 million from the unit upon opening the investigation.
The Breakdown of the Labor Scheme
The central charge revolved around a form of “digital gangmastering,” where Amazon’s logistics unit was accused of maintaining “directive powers” over the workers supplied by the intermediary firms.
Prosecutors argued that Amazon’s proprietary management software and algorithms effectively organized the entire distribution and last-mile delivery of goods, determining working hours, measuring performance, and even exercising disciplinary authority, despite the workers being formally employed by external entities.
This system, known in Italy as a fictitious contract scheme, allowed the primary logistics operator to access “cheap labor” without incurring the real costs associated with direct employment, generating significant losses for the state budget while minimizing operational costs for Amazon.
As part of the resolution, Amazon not only paid the compensation but also agreed to scrap the controversial monitoring system that critics say pushed drivers to unsafe performance levels. This addresses one of the key labor practice complaints often levied against the tech giant globally.
Broader Industry Crackdown
Amazon’s compensation payment is not an isolated incident but rather a major part of a sweeping Italian crackdown on illicit labor and tax practices within the logistics sector. The Milan prosecutors’ office has, over the past two years, successfully reached settlements with more than 30 companies, collecting over €1 billion in total.
The investigation has also targeted the Italian units of major global delivery rivals, including DHL, FedEx, and UPS, as well as large domestic businesses like the supermarket chain Esselunga. The recurring theme across all these probes is the use of shell companies and labor pools to conceal actual employment relationships and evade mandated contributions.
In a statement, Amazon said the resolution would lead to improved standards: “We have clarified our position with the relevant authorities, who have recognized the high standards of our collaboration model with delivery partners,” the company said, adding that its engagement with Italian institutions “has improved compliance across the entire industry.”