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Amazon begins paying sales tax in Europe amid ongoing investigation

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Company to stop funneling European sales through Luxembourg

Amazon this week confirmed that it will start paying taxes in individual European countries, rather than running nearly all of its sales revenue through Luxembourg. The decision, reported by The Wall Street Journal, comes amid ongoing investigations into the tax practices of Amazon, Apple, and other multinationals in Europe. An Amazon spokesman told the Journal that the policy change went into effect on May 1st, and that the company will begin reporting revenue in the UK, Germany, Italy, and Spain. The Guardian reported on Amazon's UK tax change last week.

Move could pressure others to follow suit

Until now, Amazon has funneled nearly all of its European sales revenue through Luxembourg, under a low-tax agreement. European regulators opened an investigation into the tax arrangement last year, and in January announced that the deal may give Amazon an illegal advantage over its competitors. Earlier this month, Europe's antitrust chief Margrethe Vestager announced that investigators would not announce a decision by the June deadline they'd previously announced, citing a lack of data. The probe also covers tax arrangements that Apple and Starbucks have agreed to in Ireland and the Netherlands, respectively.

Reporting revenue in individual countries could result in a significantly higher tax bill for Amazon, and could force other US tech companies to follow suit. It's not yet clear whether Amazon plans to report revenue in other European countries, and the company did not say whether the move was in direct response to regulatory pressure. A company spokesman told the Journal that the changes to its tax structure were planned two years ago. “We regularly review our business structure to ensure that we are able to best serve our customers and provide additional product and services,” the spokesman said.