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Investigations by the Milan prosecutor’s office have uncovered an alleged illegal subcontracting scheme.
Italian financial police have seized €121 million from a Milan-based Amazon branch after the e-commerce giant was accused of alleged tax fraud and worker exploitation. They are investigating the alleged use of so-called labour reservoirs — a system where large companies illegally subcontract logistics services to other firms and cooperatives to cut labour costs and pay less in taxes, according to the state-run ANSA news agency. The order that came with the seizure stated that the tax fraud would stem from using an “illicit mechanism of invoices” for non-existent transactions as stipulated under various fake contracts for the supply of labour, which led to the issue and subsequent use of false documents. Milan prosecutors reconstructed the “labour supply chain,” noting that the labour relations “were screened by ‘filter’ companies that in turn made use of several cooperative companies, which systematically omitted the payment of VAT, as well as social security and welfare charges.”Amazon told Euronews in an emailed statement: “We comply with all applicable laws and regulations where we operate, and require companies who work with us to do the same.””We hold ourselves and our partners to the highest standards, and have an established Supplier Code of Conduct that must be followed in order to work with us,” the statement continues. “We’ll continue to help the relevant authorities with their enquiries.”Amazon is the latest target in a series of similar investigations by Italian prosecutors into major companies, including DHL, Uber and Lidl. Vacation rental giant Airbnb agreed to pay €576m to settle a four-year Italian tax dispute back in December.As for Amazon, the e-commerce company was caught in Italy’s crosshairs for alleged unfair commercial practices earlier this year. The country’s antitrust authority fined two Amazon subsidiaries €10m over their Subscribe and Save option, which allowed customers to set up recurring deliveries of frequently purchased items.According to Italian officials, the automaticity of this function infringed on consumers’ rights.
