July 17, 2013

Amazon made €6.8bn in Germany last year, paid €3m in tax


“No taxes, please and danke.” – Jeff “Fritz” Bezoschlaffer

We already knew that Amazon really, really hates paying taxes in the U.S. and the U.K.. Late last week, it came out that it’s also maybe not so interested in paying taxes in Germany, either.

On Friday, Reuters reported that Amazon paid only  €3 million in taxes in 2012 by channeling “sales to German clients of $8.7 billion via Luxembourg. The company reported a profit of just €10 million, which was taxed at 30%, to Germany’s company register, which is almost hilariously brazen. If my calculations are correct, Amazon paid .0004% of its German income in taxes last year, despite the fact that Germany is Amazon’s second largest market (behind the US, of course), and accounts for a third of its international sales.

Over at ZDNet, Moritz Jaeger explains the scheme:

To avoid relatively high German taxation, Amazon is channelling its business through its Amazon Europe Holding Technologies, based in Luxembourg, where the income tax is a lot lower. (Under the legal arrangement, when a European customer makes a purchase, they are buying from the Luxembourg company, with the order then fulfilled by Amazon’s local subsidiary. As a result, the sale is chalked up to the Luxembourg unit, where it is taxed.)

According to Reuters, Amazon Europe Holding Technologies reported profits of €118m last year, but “as a tax-exempt partnership, paid no income tax.” (Sidenote: the 1st entry on the not very funny Facebook page You know you’re from Luxembourg when… is “you absolutely hate the Germans, although you constantly watch German TV, read German newspapers, listen to German music and know more about what’s going on in Germany than in your home country.” So maybe it’s a jealousy thing?)

Many German politician have been calling for tougher domestic and international tax laws, so companies like Amazon pay their fair share in the countries in which they operate. Sven Giegold, of Germany’s Green Party and the European Parliament, told Reuters he was outraged and that “We have to use much stronger means to ensure the profit cannot be moved out of the country.”

He also said that he plans on addressing the issue with Wolfgang Schaeuble, Germany’s finance minister (and runner-up in 2011’s “Most German Name Competition”). “It’s not enough to make a speech at the G20 and then be inactive on extreme cases [of tax avoidance],” Giegold said, despite the fact that it looks increasingly likely that the tax avoidance issue is going to get speeches and little else at the upcoming G20 after the U.S. insisted that any changes to international tax laws be symbolic, rather than meaningful.

Though Amazon remains very popular in Germany, there has been some trouble recently. Employees at Amazon warehouses in Germany went on strike on two separate occasions in May.


Alex Shephard is the director of digital media for Melville House, and a former bookseller.