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Amazon and the Importance of Europe

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Europe is an important market for Amazon

A significant portion of Amazon’s (AMZN) revenues comes from overseas markets, including Europe (EFA). In 2Q17, Amazon recorded $11.5 billion in international revenue, a 17.0% rise year-over-year. The chart below shows how Amazon’s international sales have trended over the past several quarters.

The European e-commerce industry is expected to expand 14.0% this year to $685.0 billion, according to Ecommerce Europe. Amazon is trying to nurture good relationships and guard its brand image in Europe.

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Europe and multinationals

Amazon is heading into its 3Q17 earnings season amid claims by the European Commission (EZU) that it owes $294.0 million in unpaid taxes to Luxembourg. The European Union has also questioned the tax practices and market dominance of other US (SPY) multinationals. In addition to Amazon, it has investigated Apple (AAPL) and McDonald’s (MCD) over taxes. In June, the European Union imposed a record $2.8 billion fine on Alphabet’s (GOOGL) Google following a ruling that Google abused its power as a dominant Internet search engine provider.

Amazon disagrees with tax ruling

Amazon disagrees with the European Commission’s claim that it negotiated an illegal tax arrangement with Luxembourg. Amazon said it’s considering an appeal of the ruling.

Amazon is expected to report its 3Q17 results on October 25, 2017. Some investors expect the company to address the tax ruling, especially its potential implications on Amazon’s finances and relationship with the European Union.

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