Amazon has announced that it will begin paying European taxes at last. But will that mean the company simply hikes its prices to cover the cost, leaving us out of pocket anyway?

Until now Amazon has been paying its European tax in one country, Luxembourg, where tax rates are low. The European Commission has been placing pressure on Amazon and now it appears to have taken affect. Amazon will begin paying direct taxes in some of the biggest European countries including the UK, Germany, Italy and Spain from 1 May.

Another pressure on Amazon was the UK law from chancellor George Osbourne which is being called the "Google Tax". This deters large tech companies from diverting revenue overseas by imposing a 25 per cent levy on their domestic profits.

So while Amazon is leading the way are its customers going to end up footing the bill?

It seems that Amazon will now have two options. It could either swallow the extra expense itself or simply up its prices to cover the extra tax. However, even if it is the latter you might not even notice, with such a wide selection of goods to spread it across this hike could be subtle enough to make very little difference to consumers.

There is also the chance that charges to sellers will increase, rather than charges to end customers. Although here it would be likely that sellers just put prices up too.

With Amazon prices so ridiculously low perhaps a small increase isn't a bad thing – it could help other companies compete at least. 

READ: What is the Google tax and will it affect you?

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