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Italian police raid Amazon ( AMZN ) sites in probe of Chinese goods

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Prosecutors see Amazon ( AMZN ) as 'Trojan horse' for tax-free

imports

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Smuggling, tax probes may spread to other EU states,

sources say

(Adds further details of Italian investigation paragraphs

13-14, probe expected to spread to other EU nations paragraphs

15-16, further background on Amazon ( AMZN ) investigations paragraphs

19-23)

By Emilio Parodi

MILAN, Nov 24 (Reuters) - Italian police carried out

searches and seizures at two Amazon ( AMZN ) sites in Italy on

Monday as part of an investigation into the alleged smuggling of

Chinese goods, three people with direct knowledge of the matter

said.

Dozens of officers from the Guardia di Finanza tax police

and the customs agency seized around 5,000 products at a

logistics hub operated by the e-commerce giant in Cividate al

Piano, in the northern province of Bergamo, the sources said.

At Amazon's ( AMZN ) Italian headquarters in central Milan, police

seized IT equipment and identified the Amazon ( AMZN ) manager

responsible for the transportation of goods within Italy, the

sources added.

Amazon ( AMZN ) in Italy was not immediately available for comment.

NEW LINE OF INQUIRY STEMMING FROM PREVIOUS CASE

Italian prosecutors allege that Amazon ( AMZN ) acts as a kind of

"Trojan horse" allowing an as yet unknown number of Chinese

goods to circulate in Italy without being appropriately taxed, a

court document showed on Monday.

Among the products seized at the Bergamo centre were toys,

mobile phone covers, air fryers, pens and small scissors.

It was not immediately clear what impact the two operations

would have on Amazon's ( AMZN ) activities in Italy.

The smuggling probe is a new line of inquiry stemming from

an investigation into an alleged 1.2 billion euro tax evasion

case.

The new case, led by Milan prosecutors together with the

Monza branch of the Guardia di Finanza, alleges smuggling

offences by dozens of Italian companies, many of which are

believed to be fronts for Chinese entities, and the manager in

charge of the movement of goods via Amazon ( AMZN ).

Prosecutors suspect that goods are being brought from China

into the European Union, and then into Italy, through currently

unknown channels, without sales taxes or customs duties being

paid.

The products are then allegedly moved and sold in Italy via

Amazon's ( AMZN ) marketplace.

Milan prosecutors are investigating both suspected smuggling

and violations of the EU customs code.

PROBE EXPECTED TO EXPAND TO OTHER EU NATIONS, SOURCES SAY

Since last summer, two other ongoing operations have

proceeded with Amazon's ( AMZN ) cooperation due to the complexity of

managing goods flows in the e-commerce giant's logistics hubs.

Three people with direct knowledge of the matter said the

number of products involved could total half a million, with the

probe expected to be extended to the rest of the European Union.

Milan prosecutors were summoned to The Hague headquarters of

the EU agency for criminal justice cooperation Eurojust in July,

where they presented the scope of their investigation to

counterparts from several EU countries, including Germany,

France, the Netherlands, Poland, Spain, Belgium, Sweden and

Ireland.

Disputes over customs duties and sales taxes have fueled

growing tensions with the United States over the past year, but

it is unclear how this case involving China will be viewed in

Washington and Brussels.

TAX EVASION: EU PROSECUTORS ALSO INVESTIGATING

In the original 1.2 billion euro tax evasion case, Milan

prosecutors investigated three managers and Amazon's ( AMZN )

Luxembourg-based European unit over alleged tax fraud related to

online sales in Italy between 2019 and 2021.

According to the probe, Amazon's ( AMZN ) algorithm allows it to sell

in Italy goods from non-EU sources, mostly Chinese, without

disclosing their identity, helping them avoid paying Italian

sales taxes.

Under Italian law, an intermediary offering goods for sale

in Italy is jointly liable for non-payment of sales taxes by

non-EU sellers using its e-commerce platform.

Amazon ( AMZN ) said in a previous statement that it was "committed

to complying with all applicable tax laws".

In relation to that case, Italy's tax agency has submitted a

settlement proposal to Amazon ( AMZN ) on which the U.S. group must

decide by December.

Amazon's ( AMZN ) tax position has also been investigated by the

European Public Prosecutor's Office (EPPO), which has opened its

probe into its accounts between 2021 and 2024 after new EU rules

imposing stricter VAT obligations on marketplaces came into

force.