Amazon has reached an agreement with Italy’s tax collection agency to pay 510 million euros (approximately $582 million) to resolve a major tax dispute covering the period 2019-2021.
However, this civil settlement has failed to appease judicial authorities, as Milan’s prosecutors have taken the highly unusual step of publicly disagreeing with the accord and vowing to continue their parallel criminal investigation into the U.S. technology giant.
The 510 million euro settlement was concluded with the Italian Revenue Agency (Agenzia delle Entrate) and addresses tax liabilities stemming from Amazon’s operations, particularly concerning where profits were booked versus where sales took place. The figure represents about 43% of the €1.2 billion in alleged tax evasion Milan prosecutors suspect is linked to the 2019-2021 period.
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This is not the first time Amazon has settled a major tax case in Italy. In 2017, the company paid €100 million to resolve disputes dating back to 2011-2015. More recently, an Italian Amazon logistics unit settled a separate probe into alleged tax fraud and illegal labor practices earlier this month by paying approximately €180 million and dismantling a controversial algorithm-based delivery staff monitoring system.
This total of over €720 million paid in recent years underlines the aggressive stance Italian authorities have taken toward taxing multinational tech firms.
Despite the significant civil payment, the Milan Prosecutor’s Office is pushing forward with its criminal probe. This unusual split suggests a fundamental disagreement between the administrative tax body and the judicial branch over the severity and extent of the alleged fraud. Prosecutors, who suspect evasion potentially reaching €1.2 billion and perhaps €3 billion when penalties and interest are factored in, are expected to wrap up their investigation—which places Amazon’s Luxembourg-based European unit and three executives under scrutiny—early next year.
Amazon confirmed the settlement without specifying the amount, but issued a strong rebuke against the ongoing judicial action. The company stated it “will forcefully defend our position on the potential ungrounded criminal case.”
Furthermore, Amazon criticized the regulatory climate, arguing that “Unpredictable regulatory environments, disproportionate penalties, and protracted legal proceedings are increasingly affecting Italy’s attractiveness as an investment destination.”
The Core of the Criminal Allegations: VAT Evasion
The heart of the ongoing criminal investigation involves suspected Value-Added Tax (VAT) fraud related to cross-border e-commerce transactions, specifically concerning non-EU third-party sellers on the Amazon marketplace.
Under Italian law, since 2019, e-commerce platforms like Amazon are held jointly responsible for the non-payment of VAT by non-EU sellers who use their marketplace to sell goods directly to Italian customers. This law, which anticipated a broader EU-wide reform (DAC7) implemented in 2021, aims to standardize VAT collection and prevent tax losses.
Prosecutors allege that between 2019 and 2021, Amazon failed to collect and remit VAT on behalf of these non-EU sellers, many of whom are Chinese, allowing them to evade Italian tax. The total value of the transactions under scrutiny is substantial, potentially posing a direct challenge to Amazon’s core marketplace business model across Europe if the allegations are upheld. The investigation focuses on whether Amazon’s operational algorithms and structures intentionally facilitated the evasion of these obligations.
Multiple Fronts of Scrutiny
The tax dispute is merely one component of Amazon’s growing legal exposure in Italy. Milan prosecutors are currently conducting at least two other, separate, and active investigations into the company’s activities:
- Second Tax Evasion Probe: A new investigation focusing on alleged tax evasion covering the more recent period of 2021 to 2024.
- Customs and Tax Fraud Probe: A separate investigation centered on alleged customs and tax fraud involving the importation of goods from China. This probe examines whether proper customs duties and taxes were applied to products crossing EU borders.
The relentless scrutiny in Italy, which is mirrored by increased regulatory intensity across the European Union, underscores the global effort to ensure that digital economy profits are taxed appropriately where sales occur, rather than being routed through low-tax jurisdictions.