Most companies seek to pay no more tax than they have to because managers have a fiduciary duty to investors to maximise long-term profits.
Amazon and the IRS have been in dispute for years about Amazon Europe Holding. The unit pays U.S. affiliates to use existing software and shares the U.S. affiliates' cost of funding new technology, in return for the right to re-license this technology to affiliates in Europe.
According to a filing with the U.S. Tax Court in December 2012, the IRS has argued that Amazon Europe Holding should have paid much more to the U.S. affiliates, A9.com Inc and Amazon Technologies Inc., for the rights it received.
If Amazon Europe Holding had paid more, this would have increased Amazon group's U.S. taxable income. The IRS said Amazon Europe should have paid the U.S. arm an additional $110 million in cost-sharing payments in 2006 alone.
Amazon took a legal challenge against the IRS claims, saying its 2005-to-2011 payments were appropriate, the December 2012 court filing said.
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Nonetheless, from 2012, Amazon Europe Holding increased the amount it paid its U.S. affiliates substantially.
In 2012, it paid them 408 million euros, up from 229 million euros in 2011. In 2013, it paid 420 million, accounts filed in Luxembourg this week showed.
Amazon declined to say why the payments had risen. Lawyers and accountants say the IRS has been tightening the rules covering inter-company cost-sharing agreements since December 2008.
Last year, it finalised new rules curtailing the discount rates companies could use when deciding the prices for inter-company cost-sharing deals.
"Amazon's decision is probably a result of negotiation with the IRS. I don't think that's something they would have chosen to do," said Richard Murphy, a tax adviser-turned-campaigner.
The higher payments mean profits at Amazon Europe Holding have fallen sharply, even as its income has risen.
Profits of 157 million euros last year were up from 118 million in 2012, but these results compare to profits of 302 million to 442 million between 2008 and 2011. No tax was paid on that income, accounts show.
Cost-sharing agreements are widely used by U.S. companies including Google and Microsoft. Yet the contracts are not published and deals usually involve subsidiaries in the Caribbean or Singapore, where companies are not obliged to file accounts.
Despite the higher payments its European operation is making to U.S. affiliates, Amazon's European business continues to thrive, with profit margins around 50 percent higher than at its U.S. operation.