(MILAN, ITALY) — A February 12, 2026 raid in Milan expands Italy’s tax scrutiny of Amazon, probing whether a hidden permanent establishment generated untaxed profits between 2019 and 2024, and foreshadows broader tax and governance implications for multinationals operating in Italy.
Section 1: Overview of the investigation
Milan tax police raided Amazon’s Milan headquarters and searched the homes of seven executives on February 12, 2026. Authorities seized computers and storage devices from managers. Investigators also targeted retained employee emails, including messages kept on hard drives after deletion from Amazon systems.
Milan prosecutors are treating the case as a permanent establishment issue. A permanent establishment (often shortened to PE) is a taxable presence in a country. It is not the same as “having customers” there. In many cases, it means a company has enough people, premises, or decision-making in the country that local authorities can tax profits tied to that activity.
That distinction matters because cross-border groups often book European sales through an entity outside Italy, such as a Luxembourg company. If Italy concludes that a PE existed inside Italy, it may claim taxing rights over business profits tied to Italian functions. That can affect corporate income tax, penalties, and in some cases parallel tracks that include administrative assessments and criminal-style investigative tools.
Raids also bring corporate governance into the picture. Document retention, employee communications, and approval chains can become central evidence. So can internal controls that show who really made commercial decisions day to day.
Table 1: Context and timeline at a glance
| Event | Date | Entities Involved | Significance |
|---|---|---|---|
| Raids on Milan headquarters and searches of executives’ homes | February 12, 2026 | Milan prosecutors; Amazon EU Sàrl | Escalates the investigation using search-and-seizure powers and digital evidence collection |
| Period under review for alleged hidden PE | 2019–2024 | Amazon EU Sàrl | Frames the years for profit attribution, staffing models, and intercompany arrangements |
| Cooperative compliance join-year | August 2024 | Amazon EU Sàrl; Italian tax authority | Marks a shift toward a structured relationship with tax authorities, without automatically closing earlier years |
| Settlement of a separate dispute | December 2025 | Amazon; Italy’s tax collection agency | €510 million payment tied to a different dispute referencing a €1.2 billion evasion claim for 2019–2021 |
| Additional probes referenced publicly | 2021–2024 | Milan prosecutors | Separate investigations may proceed in parallel, including other tax theories |
Section 2: Investigation details (who, what years, and what the allegation means)
Amazon EU Sàrl, a Luxembourg-based entity, is under proceedings in Milan. Milan prosecutors have also opened proceedings against its director, Barbara Scarafia. Prosecutor Elio Ramondini is coordinating the investigation.
At the center is an allegation of failing to declare income in Italy. Put simply, prosecutors are examining whether business profits that should have been reported in Italy were instead kept outside the Italian tax net. A “hidden PE” theory often asserts that the group’s Italian people and operations did more than support services. If those Italian functions were essential to earning revenue, Italy can argue that profits belong in Italy for tax purposes.
Years matter in a PE dispute. The 2019 to 2024 window shapes what contracts apply, how personnel were structured, where management sat, and what documentation exists. It also affects what emails, approvals, and HR records may still be available. Staffing models from earlier years can become especially sensitive when a company later changes its structure.
Tax authorities typically look at concrete facts, not labels. Common PE indicators include where decisions were made, whether local employees acted like dependent agents who concluded deals, whether offices or logistics created a fixed place of business, and whether local management ran core functions rather than back-office support.
Section 3: Key evidence and actions (what authorities look for in a PE case)
A major fact in the investigation is a 2024 staff transfer involving 159 employees. Investigators point to those 159 employees being moved from another Amazon entity and then rehired in Milan with the same activities and functions. In PE analysis, that type of change can be probative. It may suggest that people doing core work were already effectively operating locally, even if contracts placed revenue elsewhere.
Digital evidence often becomes the backbone of a modern tax investigation. Seized devices can show who approved pricing, who negotiated key terms, and who directed local teams. Email recovery can matter for another reason. Deleted messages may still exist on hard drives, backups, or individual devices, and investigators may treat them as proof of day-to-day control.
Scrutiny can extend beyond the company under investigation. The Guardia di Finanza inspected the offices of KPMG, which is not under investigation, because the firm provided opinions on the actions being examined. That step highlights a practical issue for multinationals: communications with auditors and advisors may be reviewed, and confidentiality or privilege protections can be narrower than some executives expect under local law.
Once a PE is asserted, the next question is profit attribution. Authorities commonly examine “functions, assets, and risks” to decide how much profit should be allocated to Italy. Treaties often shape the boundaries of what counts as a PE and how profits are attributed, but the result still turns on operational facts.
⚠️ Note on PE: a hidden permanent establishment can shift taxing rights; ensure controlled documentation and governance to mitigate exposure
Section 4: Financial context and related disputes (why numbers, settlements, and parallel probes matter)
December 2025 brought a separate, high-profile settlement. Amazon agreed to pay €510 million to Italy’s tax collection agency to resolve a different dispute tied to an alleged evasion claim of €1.2 billion for 2019–2021. That settlement does not automatically end every open question. Different cases can cover different taxes, different legal theories, and different periods.
Overlap in years can confuse non-specialists. An investigation might examine 2019–2024 for a PE theory while another inquiry focuses on 2021–2024 under a separate suspected scheme. Prosecutors have also been reported as pursuing suspected customs and tax fraud linked to Chinese imports. Those matters can coexist because customs, VAT-style issues, and corporate income tax often run on separate tracks, even when they touch the same supply chain.
August 2024 is another key marker. Amazon joined a cooperative compliance programme with the Italian tax authority and began paying taxes domestically. Cooperative compliance, in concept, is a structured relationship where a company shares more information earlier, and the tax authority provides more timely feedback. It can change audit posture and documentation expectations. Still, participation does not typically erase historical exposure, especially where prosecutors allege a PE existed before entry.
Amazon has emphasized that it paid taxes throughout the period under scrutiny. It has also cited total tax contributions exceeding €1.7 billion in 2024, plus €4 billion invested in Italy in 2024 and support for more than 20,000 Italian SMEs through Amazon.it. Those figures provide context, but they do not settle the technical PE question. PE disputes are often about where profits should have been taxed, not whether a group paid some taxes somewhere.
Section 5: Amazon’s response and practical implications for businesses operating in Italy
Amazon has criticized the actions as “aggressive and wholly disproportionate.” The company also warned that “unpredictable regulatory environments, disproportionate penalties, and protracted legal proceedings are increasingly affecting Italy’s attractiveness as an investment destination.” That kind of statement is common during active investigations. Public language is usually careful because admissions, even indirect ones, can be used later.
For other multinationals operating in Italy, the practical lesson is less about headlines and more about operating design. PE risk often rises when local teams have real authority but paperwork says otherwise. That gap can appear in who approves customer terms, who directs marketing strategy, who manages logistics, and who controls budgets.
Contracting practices also matter. If the local team routinely acts as the “real seller,” authorities may treat the foreign contracting entity as a formality. HR and mobility files can become key evidence too, especially during reorganizations. The 159 employees rehired in Milan illustrate why: staffing changes can look like a confirmation of what was already happening operationally.
✅ If your company operates in Italy, review intercompany agreements, local governance controls, and staff-transfer records for 2019–2024
Risk governance is the other pressure point. Boards and audit committees often expect clear escalation routes when raids or information requests arrive. Coordinating tax, legal, HR, and IT is not optional in that moment. Device management, email retention rules, and approval workflows can determine whether a company can respond accurately and consistently.
Section 6: Contextual background and broader implications (what to watch next in PE enforcement)
Across Europe, PE enforcement remains a recurring theme. Digital commerce can create large local footprints without a traditional sales office. Logistics networks and warehouses can deepen the factual case. A growing local workforce can do the same, especially where local managers direct revenue-generating activity.
Definitions also evolve over time. Tax authorities refine their approaches through audits, administrative guidance, court decisions, and treaty interpretation. Profit attribution methods continue to develop too, particularly where groups centralize legal ownership in one country while operational control sits elsewhere.
Stakeholders usually monitor a few practical signals in cases like this. Procedural steps matter, including whether filings become public through court processes. Companies also watch for changes in operating models, such as shifts in contracting or management authority. Adoption of cooperative compliance programmes can be another signal, because it often comes with tighter internal documentation expectations.
This article discusses ongoing investigations and should include qualified language and caution about conclusions.
Tax and legal consequences can vary; consult a qualified professional for case-specific guidance.
