Amazon’s European subsidiary paid no corporate tax for 2020

Amazon’s European branch paid no corporate tax in Luxembourg last year, despite earning some 44 billion euros in revenue, documents show.

Amazon EU Sarl received €43.84bn (£38.01bn), up €11.65bn from 2019, filings first reported by The Guardian reveal.

However, as it recorded a loss of 1.19 billion euros (£1.03 billion), the Luxembourg-based subsidiary was not required to pay any tax and in fact received a credit of 56, €39m (£48.95m).

Adding up the losses, including from previous years, gives the company €2.7bn (£2.35bn), which it can offset against any future corporation tax bills.

The company is the legal entity behind Amazon.co.uk, and sales from this site are counted in Luxembourg, rather than Great Britain.

The bosses are awaiting a ruling from the EU’s second highest court on its tax arrangements in the Grand Duchy, which the European Commission said in 2015 breached state aid rules.

The Luxembourg-based general court is expected to rule next week on whether Amazon will have to repay taxes of some 250 million euros (£217.08 million) to the country’s government, according to a Reuters report.

Jeff Bezos’ business has seen an overall boom during the coronavirus pandemic as customers have increasingly relied on online shopping and home deliveries.

Amazon announced late last month that its first quarter profit had more than tripled from a year ago.

With physical stores closed, it posted four consecutive record quarterly profits and recruited more than 500,000 employees to keep pace with demand.

The company has come under increasing scrutiny over its complex tax arrangements, amid push from Joe Biden and tax justice campaigners for a global minimum corporate tax rate of 21 %, designed to prevent companies from pushing profits into low-rate jurisdictions.

Alex Cobham, head of the Tax Justice Network, said The Independent that the future shape of Amazon’s corporate structure would be a “test case” for whether the proposed new rules, if implemented, had been successful.

An Amazon spokesperson said on Tuesday: “Amazon pays all required taxes in every country where we operate. Corporate tax is based on profits, not income, and our profits have remained low, considering given our heavy investments and the fact that retail is a very competitive, low-margin business.

“We have invested well over €78 billion (£67 billion) in Europe since 2010, and a large part of that investment is in infrastructure that creates many thousands of new jobs, generates significant local tax revenue and support small European businesses.

“We operate this pan-European business from our headquarters in Luxembourg, where we have over 3,000 and growing employees, including our management team.”