U.S. e-commerce giant Amazon could face a major legal battle in Italy after prosecutors in Milan requested that the company’s European unit and four of its executives be sent to trial over alleged tax evasion linked to online sales. Authorities claim that the alleged scheme led to the evasion of around ₹12,500 crore (approximately €1.2 billion) in value-added tax (VAT).
Milan Prosecutors Push Trial Despite Amazon’s ₹5,500 Crore Tax Settlement
According to sources familiar with the matter, the request for a trial has come despite the company previously reaching a financial settlement with Italy’s tax authority. In December, Amazon agreed to pay around ₹5,500 crore (about €527 million), including interest, to resolve a tax dispute with the country’s revenue agency.
In most previous cases involving international companies, once such settlements were reached and payments made, prosecutors typically closed related criminal investigations through plea agreements or by dropping the cases. However, in this instance, Milan prosecutors chose to continue their probe and have now asked a court to proceed with criminal proceedings.
A judge is expected to schedule a preliminary hearing in the coming months. During that hearing, the court will decide whether to formally indict the accused executives and the company’s European unit or dismiss the case.
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Amazon VAT Fraud Allegations: Non-EU Sellers Evade Italian Taxes (2019-2021)
The investigation centers on Amazon’s European business operations and four managers who were allegedly involved in overseeing online marketplace activity. Prosecutors claim that between 2019 and 2021, the company’s platform structure allowed numerous non-European Union sellers to conduct online sales in Italy without properly paying VAT.
Authorities allege that the company’s operational model and algorithmic systems enabled tens of thousands of foreign sellers—many reportedly based in China—to sell goods to Italian consumers while concealing or failing to fully disclose their identities. As a result, these sellers were able to avoid paying VAT that would normally be required under Italian tax laws.
Under Italian legislation, an intermediary platform that facilitates the sale of goods in the country may share responsibility for unpaid VAT if foreign sellers using the platform fail to meet their tax obligations. Prosecutors argue that this legal framework makes the company partly accountable for the alleged tax losses.
Italy Economy Ministry Named as Offended Party in ₹12,500 Crore Case
In their filing seeking a trial, Milan prosecutors also identified Italy’s Economy Ministry as the offended party in the case, arguing that the alleged tax evasion caused significant financial damage to the state.
Legal analysts note that if the allegations are ultimately upheld in court, the case could have far-reaching implications for the business models of online marketplaces across Europe. VAT is a harmonised tax system within the European Union, meaning that similar compliance obligations apply in many EU member states.
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The company has previously rejected the allegations and said it would strongly defend its position if criminal proceedings were pursued. In earlier statements, it argued that the potential case was unfounded and warned that unpredictable regulatory conditions and prolonged legal disputes could affect Italy’s attractiveness as a destination for foreign investment.
The VAT investigation is only one of several legal matters involving the company currently being examined by authorities in Italy. The European Public Prosecutor’s Office (EPPO) is reportedly investigating similar alleged tax offences related to the period between 2021 and 2024.
At the same time, Milan prosecutors are conducting two additional investigations involving the company. One probe concerns alleged customs and tax fraud linked to imports from China, while another focuses on whether the company operated in Italy through an undeclared permanent establishment between 2019 and 2024, which could mean it should have paid higher taxes in the country.
Separately, Italy’s data protection watchdog recently ordered one of the company’s local units to stop using the personal data of more than 1,800 employees working at a warehouse located northeast of Rome.
Legal experts say that if the case proceeds to trial, it could become a landmark legal battle for Europe’s digital economy. Governments across the region are increasingly scrutinising large technology platforms to ensure that foreign sellers and global e-commerce companies comply with local tax regulations.
With online retail continuing to expand rapidly, regulators are under growing pressure to ensure that digital marketplaces operate under the same tax rules as traditional businesses and that governments do not lose significant revenue from cross-border online trade.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
