Amazon starts declaring sales to pay taxes in 4 European countries

Online retail giant Amazon said on May 26 it has started declaring sales in four European countries which would now be subject to local taxes, a move that could affect other multinationals under EU investigation for possible tax avoidance.   

Amazon has tax agreements in Luxembourg under which it recorded European sales and paid taxes on them in the tiny country instead of at the source. The deal had provoked howls of criticism that the Internet giant was trying to avoid taxes, and sparked a probe by the European Commission.

But the Seattle-based Internet giant said it has established local branches in Britain, Germany, Spain and Italy.

"More than two years ago we began the process of establishing local country branches of Amazon EU Sarl, our primary retail operating company in Europe," the company said in a statement.

"As of May 1, Amazon EU Sarl is recording retail sales made to customers through these branches in the U.K., Germany, Spain and Italy," it said.

"Previously, these retail sales were recorded in Luxembourg. We are working on opening a branch for France."    

Recording its revenue in Luxembourg, a country with tax advantages for businesses, considerably lightened Amazon's tax burden. This practice is legal, but has become more and more contested in Europe, especially at a time when countries are facing huge budget deficits.

Amazon is among several large businesses under the spotlight in Europe over tax deals in Luxembourg and elsewhere.

The European Commission is also investigating tax agreements involving U.S. tech giant Apple in Ireland, coffee-shop chain Starbucks in the Netherlands, and Italian automaker Fiat in Luxembourg.

Pressure against tax avoidance has also been...