Amazon has started booking sales made to customers in the UK through the UK branch, instead of diverting sales through Luxembourg.
The company’s new arrangements came into force on 1st May. Previously retail sales have been recorded in Luxembourg, where Amazon has its European headquarters, regardless of where in Europe the customer is. This means Amazon has been able to take advantage of Luxembourg’s lower tax rate.
As of 1st May, Amazon is now recording retail sales made to customers in the UK through the UK branch, meaning it will be taxed by HMRC. A spokesman for Amazon said: "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 1st May 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."
Similar changes have also been made in Germany, Italy and Spain, according to the Wall Street Journal.
The move in the UK by Amazon means it will not have to pay the diverted profits tax, known commonly as the Google Tax, which came into force on 1st April.
It imposes a 25% tax on the profits of companies which artificially move profits outside of the UK in order to avoid paying tax.
From 1st May, Amazon’s EU SARL website is “going live with our UK Local Branch Amazon EU Sarl”, with a new bill-to address and related VAT number.
A spokesman for Amazon told The Bookseller: “We regularly review our business structure to ensure that we are able to best serve our customers and to pursue future growth opportunities.”
Earlier this year the European Commission released preliminary findings that said Luxembourg provided “state aid” to Amazon through its tax arrangements for the company.
In 2012 Amazon appeared before the House of Commons Public Accounts Committee, where it was accused of putting UK booksellers out of business by using corporation tax avoidance strategies.
Independent bookshops reacted to the revelations by displaying “We Pay Our Taxes” posters in their shops, created by The Booksellers Association. A series of other point-of-sale material was also created.
Meanwhile Christopher North, Amazon’s UK m.d. resigned from the board on 1st May alongside Rob McWilliam, the UK finance director, said The Guardian. North remains as country manager and head of Amazon in the UK.