Full Breakdown
Amazon Faces Criminal Trial in Italy Over Alleged €1.2 Billion Tax Evasion
3/12/2026, 11:00:05 PM
Overview of the Legal Proceedings
Milan prosecutors have initiated criminal proceedings against Amazon's European division and four of its executives, alleging tax evasion amounting to approximately €1.2 billion ($1.38 billion). This unprecedented move follows Amazon's settlement in December 2022, where the company agreed to pay €527 million to Italy's Revenue Agency to resolve a tax dispute. Historically, similar cases involving international corporations in Italy have concluded with prosecutors dropping investigations after settlements. However, in this instance, prosecutors opted to pursue criminal charges despite the settlement.
Allegations of VAT Evasion
The core of the allegations centers on Amazon's operations between 2019 and 2021, where prosecutors claim the company's algorithms facilitated value-added tax (VAT) evasion. Specifically, Amazon EU Sarl, based in Luxembourg, allegedly enabled tens of thousands of non-EU sellers—primarily from China—to sell goods in Italy without disclosing their identities, thereby avoiding VAT obligations. Under Italian law, intermediaries like Amazon are jointly responsible for unpaid VAT from non-EU sellers using their platforms.
Implications for Amazon's Business Model
If the allegations are upheld in court, they could significantly impact Amazon's business model across Europe, as VAT regulations are harmonized across EU member states. The Italian Economy Ministry has been identified as the offended party in the trial request, indicating the seriousness of the charges. Legal experts suggest that the outcome of this case could set a precedent for how multinational corporations are held accountable for tax compliance in Italy and potentially across Europe.
Additional Investigations
In addition to the current case, Milan prosecutors are conducting two other investigations related to Amazon. One probe focuses on alleged customs and tax fraud involving Chinese imports, while the other examines whether Amazon had an undeclared permanent establishment in Italy from 2019 to 2024, which would necessitate additional tax payments. Furthermore, the European Public Prosecutor's Office is investigating similar alleged violations covering the period from 2021 to 2024.
Official Statements & Responses
Following the December settlement, Amazon stated it would "forcefully defend its position on the potential ungrounded criminal case." The company also expressed concerns regarding Italy's regulatory environment, noting that "unpredictable regulatory environments, disproportionate penalties, and protracted legal proceedings are increasingly affecting Italy's attractiveness as an investment destination."
Criticism & Opposition
Critics argue that the decision to pursue criminal charges against Amazon, despite the settlement, reflects a shift in Italy's approach to corporate taxation and could deter foreign investment. The move has raised questions about the consistency of Italy's legal framework and its implications for international businesses operating within its borders.
What's Next
A judge will soon schedule a preliminary hearing to determine whether the defendants will be formally indicted or if the case will be dismissed. The outcome of this hearing will be pivotal in shaping the future of Amazon's operations in Italy and potentially influence broader EU tax compliance standards.
