Munich (dpa) – Internet retailer Amazon has begun paying taxes on its earnings in Germany, ending a longtime practice of making such payments in Luxembourg, the company told a German newspaper in comments published Sunday.
The issue of whether Amazon tries to game the system and pay taxes in countries where the rates are lowest – even if the sales are conducted in countries with higher tax rates – has put the company in the European Union’s spotlight.
However, an Amazon official told the Sueddeutsche Zeitung that the decision was not linked to any EU pressure.
“We regularly review our corporate structure to ensure that we can serve our customers in the best manner possible,” said a spokesman, noting that the change went into effect on May 1.
It is not yet known how much extra revenue the change will mean for German tax revenues.
The question of whether some companies have obtained preferential tax deals in order to draw their business to certain EU countries has become an issue between the EU and countries like Luxembourg, Ireland and the Netherlands.
The issue of Luxembourg’s alleged deals created the LuxLeaks scandal, as questions have arisen about whether European Commission President Jean-Claude Juncker is pushing against the same tax deals he allegedly approved during his 18 years as prime minister in Luxembourg.
Much of Amazon’s business model depends on rapid expansion and investment, but with slim profit margins. The company this year reported a loss of 57 million dollars for the first quarter, a drop from profits of 108 million dollars in the same period in 2014, despite a 15-per-cent increase in sales to 22.72 billion dollars.