Amazon.com’s main German unit paid income tax of just €3m in 2012 after the group channelled sales to German clients of $8.7bn via Luxembourg units, prompting one lawmaker to call for an investigation of the company.
Accounts for Amazon.de GmbH filed with Germany’s companies register show that the company reported profit of just €10m for 2012, which was taxed at the headline German rate of 30%.
Germany is Amazon’s largest non-US market and represents a third of its overseas sales, but the vast bulk of that German cash ends up ultimately in Luxembourg-registered Amazon Europe Holding Technologies, which reported profits of €118m but, as a tax-exempt partnership, paid no income tax.
Amazon declined requests to comment but has previously said it follows the tax rules in all the countries where it operates.
All companies seek to reduce their tax bills and have a duty to steward their assets effectively, tax lawyers say.
Even so, the lengths to which some go to avoid tax has put the issue at the top of the political agenda in the past year. Citizens bearing the brunt of the financial crisis have been angered at revelations that some companies have created elaborate networks of subsidiaries whose chief purpose is to siphon profits out of countries where their economic activity occurs and into tax havens where they have little or no physical presence.
At a meeting of the G20 group of leading economies in November last year German finance minister Wolfgang Schaeuble teamed up with his British counterpart, George Osborne, to push for changes in international rules that allow companies to shift profits.
Amazon is not alone in facing criticism for its tax arrangements. Others including Google and Apple have come under fire for similar methods to move profits to jurisdictions where they will pay less tax. Both say they follow tax rules wherever they operate.
Sven Giegold, member of the European Parliament with Germany’s Green Party, said the low profits declared and taxes paid by Amazon in Germany showed the need for a tougher approach by the German authorities.
Giegold said he planned to write to Schaeuble to ask him to investigate the matter to see if any rules had been broken.
“It’s not enough to make a speech at the G20 and then be inactive on extreme cases (of avoidance),” he said.
Amazon minimises its tax bills across Europe by having customers transact with a Luxembourg company Amazon EU SARL when they click the purchase button on European websites.