London - Amazon.com filed accounts on Friday showing a UK tax bill of €10m despite $7.3bn sales in Britain, because the company reports most of its European profit in a tax-exempt Luxembourg partnership.
Amazon.co.uk reported a 56% rise in profit to €17m during 2013 on a 13% rise in UK revenues, which one academic said could mean the company came under pressure from the UK tax authority to change its tax arrangements.
Corporate tax avoidance has become a hot topic in Europe following revelations in the past couple of years about how companies like Apple and Google pay little tax in many of their main markets.
Amazon said it follows all the tax rules in every country where it operates. Apple and Google also say they pay all the tax they should. HMRC declined comment.
All Amazon customers in Europe contract directly with and pay Luxembourg based Amazon companies for the goods and services they buy. These companies reduce their taxable income by paying fees to a tax exempt partnership, also based in the Grand Duchy.
Amazon.co.uk is funded by its Luxembourg-based affiliates. The rates of such inter-company remuneration are usually agreed with the UK tax authority.
In 2013, intercompany fees paid to Amazon.co.uk rose 40% to €449m.
The result was that Amazon's current tax bill for 2013 was its biggest ever.
"It's possible Amazon may have come under pressure from HMRC (the UK tax authority) to adjust their inter-company agreements," Prem Sikka, Professor of Accounting at Essex University said.
The amount of money Amazon.com reports through the tax-exempt partnership that sits atop its European corporate structure has dropped sharply in the past two years, after the US tax authority tightened rules it felt were being abused to shift profits.