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The e-commerce industry has one of the highest tax levels in Italy

Posted on by darion

According to research conducted by Luiss Business School in Rome, supported by Amazon, both traditional retail and e-commerce are characterized by some of the highest levels of taxation in Italy, in relation to the added value generated (1). In 2022, taxation levels averaged around 20% overall, with a slightly higher value for e-commerce (21%) compared to traditional retail (19%). Furthermore, the tax contribution of retail increased between 2016 and 2022, especially for online trade. The study highlights that retail is characterized by low operating profit margins, resulting in a relatively low tax contribution in relation to revenues (median value around 3%). It also highlights the role of digital intermediaries in trade, due to the significant amount of indirect taxes they collect.

The study examined how the Italian tax system applies to businesses, with the aim of establishing whether the tax burden is evenly distributed across sectors. An economic and financial analysis was carried out to assess the impact of tax contributions and key indicators from the financial statements of the 3,000 largest companies operating in Italy, divided by industry.

The results show that the 50 companies with the highest tax contributions in Italy paid a combined €3.13 billion in direct taxes and social security contributions to the Italian government in 2022. On average, each of these 50 largest corporate taxpayers paid around €62 million in taxes. Amazon’s total direct tax payment of over €321 million in 2022 places the company in the top 50 Italian companies in terms of total tax contribution to the government. Amazon’s contribution is in line with the study’s findings that its overall tax burden relative to revenues is comparable to other companies operating in the retail sector.

As we shared in our economic impact blogIn 2022 (base year of the study), our total tax contribution – combining direct and indirect taxes – amounted to over €1.147 billion (+53% compared to €751 million in 2021), compared to a total revenue from Amazon’s business activities in Italy of over €9.44 billion (+8% compared to €8.75 billion in 2021). This can be broken down into:

  • Our total taxes incurred directly, amounting to over EUR 321 million (+24% compared to €258 million in 2021). Employer taxes made up a large part of this. Other direct taxes included corporate income tax, taxes paid on land acquisition or construction, a digital services tax and import duties.
  • We collected additionally 826 million euros in indirect taxes (+68% compared to EUR 493 million in 2021) as a result of our business activities in Italy. These are taxes that we collect and remit from our customers, employees and other third parties, including VAT and taxes paid by our employees. The increase in 2022 was largely due to net VAT. From 1saint July 2021, Amazon collects and remits Italian VAT on transactions involving foreign sellers. This VAT is calculated by Amazon and collected from customers at checkout.

(1) Value added is a measure of the increase in value that occurs in the production and distribution of goods and services; it is the difference between the value of production and intermediate costs.