It follows a move by the G20 group of nations to commission the Paris-based OECD to overhaul international tax rules, following a public backlash against the low tax bills paid by multinationals.
Germany is Amazon's biggest market outside North America, its annual report shows, but until recently all sales and almost all profits were reported via lightly taxed Luxembourg companies.
Amazon's tax deal in Luxembourg BROKE the LAW, says EU http://t.co/XksG5NVTA3 Via @ns_app pic.twitter.com/ZIsgF5fusC
— Hassan (@E1Hassan) February 3, 2015
Amazon's main German operating unit, Amazon.de GmbH, manages the German website and oversees deliveries but is funded by payments from the Luxembourg companies. In a statement, Amazon Germany said:
"Corporate tax is based on profits, not revenues. E-commerce is a low-margin business and highly competitive, and Amazon continues to invest heavily around the world, which means our profits are low".
London HQ Change… Others to Follow
In a similar move, Amazon has established a London branch of its main retail company, which was previously based in the tax haven of Luxembourg. It will now make similar arrangements in other EU countries.
Amazon may have made its decision in the UK in response to the 25 percent “diverted profits tax” introduced by Chancellor George Osborne penalize multinationals that shift profits to low tax countries.
In a company statement, Amazon said: "We regularly review our business structure to ensure that we are able to best serve our customers and provide additional product and services. More than two years ago we began the process of establishing local country branches of Amazon EU Sarl, our primary retail operating company in Europe.
“The local country branch for the UK became official on May 1 and Amazon EU Sarl is now recording retail sales made to customers in the UK through the UK branch. Previously, these sales were recorded in Luxembourg," the statement said.
