The American online trading giant claims to employ 1,500 employees in Luxembourg (figures from early 2017), but Amazon Luxembourg reported 3,289 employees in its 2016 annual accounts.

A gap that the company, known for its discretion and its minimalist communication, explained to Le Quotidien by saying that Amazon EU, registered in Luxembourg, had 2,537 employees “including employees working in other European countries”, but did not provide any more details.

Amazon Luxembourg told Paperjam that in addition to the 1,500 employees who are actually working in Luxembourg under a Luxembourg employment contract, many employees are hired by subsidiaries of Amazon EU in other European countries (United Kingdom, France, Italy, Spain and Germany).

But the company explained a crucial detail: these employees then sign a local (thus non-Luxembourg) contract. This eliminates at first glance the question of possible “social dumping”. Amazon described such structures as common in the world of multinationals.

“It is possible for a European headquarter to maintain only a hierarchical link with its employees employed by a locally contracted subsidiary, but there are many different schemes and it is not necessarily a widespread practice among large groups”, according to a Luxembourg tax specialist quoted by Paperjam on 19 January.

If they are not seconded by Amazon EU, but are employed by the Italian or German subsidiary, employees can indeed appear in the accounts of the parent company in the form of re-invoicing salary costs by the subsidiary. This will be the case when the activities of these employees contribute to the direct benefit of the multinational.

“It really depends on the nature of the services rendered, where these services are rendered and which entities they benefit from,” the tax expert told Paperjam. 

“It is also possible for someone to work for the German subsidiary. But if, in fact, it is the Luxembourg company that gives instructions and has supervisory power over the work of the employee, it could be considered as an employer in fact under tax law,” added another tax expert.

Read the original article on Paperjam here.