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Amazon Europe Received €241m in Tax Credits in 2018

Amazon Europe Received €241m in Tax Credits in 2018

The retailer reported a pre-tax loss of €493m despite sales rising by 11.6% to €28bn, The Guardian reports.

Amazon received €241m in tax credits last year that it can deduct from future bills for its European business, despite efforts by authorities in Brussels to ensure the company pays more tax.

Amazon Europe, which is based in Luxembourg and aggregates the billions of pounds of sales the retailer makes from individual countries across the continent, received the credits after reporting a pre-tax loss of €493m in 2018. Sales rose 11.6% to €28bn.

The company, which is being pursued by the European commission for more than €250m over “illegal tax advantages” in Luxembourg, said it made the loss after investing more than €7.4bn in new fulfilment centres, head offices and services for customers across Europe. Amazon Europe also paid out €114.3bn in licence and royalty payments, partly to affiliated businesses. Tax campaigners suggest such payments help reduce profits and tax payments in particular territories.

EU legislators got tough after years of relatively low tax payments by the US-based tech firm. In 2017, Amazon paid €55m in tax on European revenues of €24.9bn, and €16.5m on revenues of €21.6bn in 2016.

Amazon Europe’s latest accounts state that in March it set aside money in an escrow account to cover the potential EU tax penalty. The document says the company continued to “defend ourselves vigorously” against the claim.

“Amazon pays all the taxes required in every country where we operate,” said a spokesman for the company. “Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low-margin business.”

The company says it has invested €55bn in Europe since 2010 and now has more than 50 fulfilment centres, 100 corporate offices and in excess of 95,000 full-time employees across Europe.

Accounts for Amazon UK’s warehouse and logistics division, Amazon UK Services, published on Monday also revealed that staff were able to cash in a bumper $221m payout in 2018 from shares vesting under the company bonus scheme. The payout was up by more than a third on the $164m received in 2017, thanks to its surging share price.

Last year’s staff shares paid out an an average stock price of $1,611, well up on the $992 average share price in 2017.

The company set aside £67.9m in 2018 for new share awards for staff, up from £54.8m a year before. Future share payouts are expected to reduce in 2019 after the company ditched annual share bonuses for UK warehouse workers.

Share-based payments help Amazon reduce its effective tax bill in the UK considerably.

Amazon UK Services received a £14m corporation tax bill in 2018, up by nearly £10m on its 2017 bill. But accounts published on Monday show Amazon expects to pay £1.06m in tax to UK authorities for 2018, down from £1.7m the previous year. That’s after £13m of the bill is offset by tax credits relating to share-based payments, up from £3m in 2017.

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