Amazon tax bill in Europe during Covid likely to put multinationals and Ireland back in spotlight          

Amazon posted massive sales in Europe during lockdown but paid little or no corporation tax to many governments. Picture: Niall Carson/PA Wire

Amazon posted sales of €44bn in Europe as its business boomed during the Covid lockdowns last year, but paid little or no corporation taxes to many governments across the continent, new filings reveal. 

The revelation is likely to be seized upon by campaigners who are calling for a global overhaul of the small or no amounts multinationals pay in corporation tax in countries where they generate huge amounts of sales. Luxembourg and Ireland have long been in the firing line for supposedly facilitating accounting practices that help multinationals lower their corporate tax bills.

Luxembourg, as well as Ireland — although not directly involved in the Amazon tax planning — have long been in the firing line for supposedly facilitating accounting practices that help multinationals lower their corporate tax bills.

The Amazon EU Sarl accounts show 2020 sales rose by €12bn but its Luxembourg-based company, through which it sells products to hundreds of millions of European households, shows it had a €1.2bn loss and therefore paid no tax. And the company has €2.7bn worth of carried forward losses stored up, which can be used against any tax on future profits.

The Luxembourg unit handles sales for the UK, France, Germany, Italy, the Netherlands, Poland, Spain, and Sweden. An Amazon spokesperson said: “Amazon pays all the taxes required in every country where we operate. 

"Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low margin business."

Under the international spotlight, much of the egregious Irish accounting practices such as "the double Irish" were phased out over a number of years, a process that started in 2013 and completed last year. The tax affairs of Apple and Ireland were investigated by a US Senate committee in 2013 and subsequently by the European Commission under Margrethe Vestager. However, the onslaught on Ireland's headline 12.5% corporation tax regime has been unrelenting. 

Proposals first advanced by the richest western nations through the Organisation for Cooperation and Development are looking for major reforms, while US President Joe Biden last month put the heft of his new administration behind an overhaul by proposing a minimum global tax rate of 21%.

His initiative was seized on by France and other large European countries which have long sought to neuter Ireland's and other low corporate-tax-proponents in Europe. Economists have warned the small print in President Biden's global tax plan will, in time, dilute Ireland's attractiveness as a location for foreign investments. 

US multinationals accounted for the bulk of the €11.8bn the Irish exchequer collected in corporate tax receipts last year. Those receipts helped pay for the large Covid spending on business and household supports. Corporate tax receipts now account for 20% of all tax revenues raised by the Government and the Department of Finance has estimated around €2bn in the future could be lost in annual tax revenues if all the proposed global tax initiatives were adopted. The Irish exchequer also benefits from the income taxes paid by the people working for multinationals. With plans for 5,000 jobs, Amazon is quickly becoming a major private employer in the Republic.