Italian authorities seize €121 million from Amazon Italia Transport over suspected tax fraud and labor violations.
TakeAway Points:
- Italian authorities seized €121 million from Amazon Italia Transport over allegations of tax fraud and labor malpractices involving couriers.
- Amazon allegedly utilised a “fraudulent pyramid structure” to evade paying welfare, social security, and VAT, according to the Milan prosecutor.
- Wider regulatory initiatives in Italy’s logistics industry are reflected in the scrutiny that other logistics companies, such as UPS and DHL, have faced.
Amazon is Suspected for Tax Fraud
Italian financial police have seized €121 million from Amazon Italia Transport, a Milan-based unit of the ecommerce giant, following accusations of tax fraud and labor malpractices. The Milan prosecutor’s office authorized the seizure, alleging that Amazon Italia Transport had orchestrated a “complex tax fraud” by misrepresenting its relationship with couriers in its delivery network. This move is part of a broader scrutiny by Italian authorities on major logistics companies, including DHL and United Parcel Services (UPS), which have also faced similar investigations and cash seizures.
The 94-page order from the prosecutor’s office detailed that Amazon couriers were officially employed by autonomous subcontractors who were allegedly “systematically omitting” to pay mandatory VAT, social security, and welfare contributions. However, the order claimed that Amazon Italia Transport exercised “the specific powers of employers” over these workers, including organizing their activities, managing operations, controlling their work, and providing necessary computer and IT equipment. This setup, described as a “complex, fraudulent pyramid structure,” allegedly allowed Amazon to avoid tax and labor-related payments, thereby maintaining competitive pricing.
Amazon’s Response
Amazon has denied any wrongdoing in response to the allegations. In a statement released on Tuesday, the company asserted, “We comply with all applicable laws and regulations where we operate and require companies that work with us to do the same.” Amazon emphasized that both the company and its partners adhere to “the highest standards” and that suppliers must follow a strict code of conduct. The company also expressed its willingness to “help the relevant authorities with their inquiries.”
The cash seizure pertains to the alleged malpractices from 2017 to 2022. The Milan prosecutor’s order highlighted that Amazon’s relationship with the couriers appeared to violate Italy’s labor laws. Despite formal legal contracts and invoices between Amazon Italia and the companies supplying workers for last-mile deliveries, the prosecutors discovered “the existence of a single economic entity, directed, managed and organized in every point of view by Amazon Italia Transport.” The order further stated that Amazon Italia Transport “exercises direct powers over the individual couriers who were formally employed” by independent manpower suppliers, who had “no operational autonomy.”
Amazon under Scrutiny
Amazon is not the only logistics company under the microscope in Italy. In December, Italian authorities seized $94.5 million from the local unit of UPS, accusing the company of acting as the direct employer of over 8,500 workers who were officially on the books of an autonomous labor cooperative. Similarly, in 2021, authorities seized €20 million from DHL in a related case. These actions reflect a broader effort by Italian authorities to ensure compliance with tax and labor laws within the logistics sector.
Amazon has faced ongoing scrutiny regarding its treatment of workers. This month, a ballot at a UK warehouse failed to gain a majority for union recognition at the tech giant. The Milan prosecutor’s order underscores the ongoing challenges Amazon faces in aligning its labor practices with local regulations.
