NextFin News - Italian financial authorities have significantly escalated their legal pressure on Amazon, conducting a series of high-profile raids across Milan as part of a deepening tax evasion investigation. On Thursday, February 12, 2026, the Guardia di Finanza (Italy’s tax police) executed search warrants at Amazon’s Italian headquarters in Milan, the private residences of seven senior managers, and the offices of the global auditing firm KPMG. According to Reuters, the operation is centered on allegations that the e-commerce giant maintained an undisclosed "permanent establishment" in Italy between 2019 and 2024 to avoid local tax obligations.
The investigation, led by Milan prosecutors, focuses on Amazon EU Sarl, the company’s Luxembourg-based entity. Investigators are scrutinizing whether Amazon effectively operated a taxable base in Italy long before it formally entered a "cooperative compliance" program with the Italian Revenue Agency in August 2024. A 13-page search warrant reveals that prosecutors are particularly interested in a 2024 staffing maneuver where 159 employees were dismissed from one entity and rehired by another, a move authorities believe was intended to mask a pre-existing permanent establishment. During the raids, police seized digital storage devices and hard drives containing internal emails, some of which had been archived after being deleted from active company systems.
Amazon has reacted sharply to the development, describing the searches as "aggressive and wholly disproportionate." In an official statement, the company emphasized that it has been engaged in a "transparent dialogue" with Italian authorities and had even applied for enhanced cooperation in March 2025 to clarify its tax treatment. Amazon representatives noted that the company is among Italy’s top 50 taxpayers and warned that such "unpredictable regulatory environments" could severely damage Italy’s reputation as a destination for foreign investment. KPMG, which provided professional tax opinions to Amazon during the period under review, has declined to comment on the search of its offices.
This latest probe is not an isolated incident but part of a broader, multi-year crackdown on Amazon’s fiscal practices in Italy. In December 2025, Amazon agreed to pay €510 million (approximately $605 million) to settle a separate tax dispute. However, that settlement did not grant the company immunity from further scrutiny. Prosecutors are currently pursuing at least three other distinct investigations: one involving alleged evasion between 2021 and 2024, another focused on customs and tax fraud related to imports from China, and a third concerning labor practices and the monitoring of delivery staff, which saw an Amazon unit pay compensation late last year.
From an analytical perspective, the focus on "permanent establishment" (PE) is a critical battleground in international tax law. Under current frameworks, a company is required to pay corporate taxes in a country if it has a fixed place of business there. Tech giants have historically used Luxembourg or Irish subsidiaries to book sales made across Europe, arguing they lack a PE in higher-tax jurisdictions like Italy or France. By raiding KPMG, Italian authorities are signaling a shift in strategy—targeting not just the corporation, but the professional advisors who validate these complex tax structures. This suggests that the "opinion of counsel" defense may no longer provide the shield it once did for multinational corporations.
The timing of these raids is also significant within the broader political context. With U.S. President Trump having been inaugurated in January 2025, his administration’s "America First" economic policy and potential retaliatory tariffs have created a tense backdrop for U.S. firms operating in Europe. While U.S. President Trump has focused on reducing domestic corporate burdens, European regulators appear emboldened to ensure that American tech firms contribute their "fair share" to local treasuries. The aggressive nature of the Milan raids—targeting private homes and seizing deleted emails—indicates that Italian authorities are no longer content with negotiated settlements and are instead building criminal cases to force structural changes in how Big Tech operates.
Looking forward, this investigation is likely to serve as a bellwether for other European Union member states. If Milan prosecutors successfully prove that Amazon’s operational model constituted a permanent establishment prior to 2024, it could trigger a wave of similar retroactive tax claims across the EU. For Amazon, the financial risk extends far beyond the €510 million already paid; the potential for multi-billion euro back-tax assessments and criminal charges against directors represents a systemic threat to its European margins. Investors should expect increased volatility in the tech sector as the legal definition of a "digital presence" continues to be aggressively redefined by national regulators.
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