Amazon in France has settled a tax dispute with the French government for an undisclosed sum. The French tax dispute is one of a number that the French government is pursuing with global companies. Amazon was also recently forced to settle a similar tax case with the Italian government, after a court ruling.
Between 2006 and 2010, Amazon operated in France using a subsidiary in Luxembourg. In a well known scheme, this meant that the company could pay a smaller tax bill because Luxembourg rates are lower. It is a well trodden tax avoidance path used by many large, global multi-nationals.
However, the French tax authorities think that all sales of goods in France should be subject to tax in France. And as a result they were asking Amazon for €203 million in unpaid taxes. Both Amazon and the French government have made no comment on the amount paid as part of the settlement but it is possible that Amazon has paid significantly less than than the €203 million sought by the French government.
The situation has since changed and now Amazon has created a subsidiary in France so that French revenue is taxed in France as normal. Amazon has been keen to stress that it spends quite good deal of money in France, as well as operating a country specific marketplace there. They employ 5,500 people in France (who will likely all be paying their taxes) and overall Amazon says it has invested $2 billion in the republic over the years.
And as Amazon in France continues to grow it makes sense for it to stay on the right side of the tax authorities if it is to continue to prosper. Do you use it?