Free up resources for AI strategy adjustments? Amazon (AMZN.US) Luxembourg headquarters hits record layoffs

The Zhitong Finance App learned that Amazon (AMZN.US)'s decision to cut 14,000 employees globally earlier this year is now causing aftershocks at its European headquarters in Luxembourg. In the next few weeks, Amazon is expected to lay off 370 local workers, or about 8.5% of its 4,370 employees. This layoff is the largest in this small country in at least 20 years, and has also become a speed bump in the mutually beneficial relationship between Amazon and Luxembourg.

This Grand Duchy, with a population of 680,000 and a land area smaller than the US state of Rhode Island, is known for its tax depression and financial center. Its salary level is relatively high and income tax is low. Like many foreign businesses, Amazon has been benefiting from preferential tax treatment and has continued to expand its business locally since 2003. Even after this layoff, Amazon will still be the fifth largest employer in Luxembourg.

According to EU labor law, companies must negotiate layoffs with employee representatives (and sometimes with the government). After two weeks of negotiations, the number of layoffs has been reduced from the initial 470 to 370. Amazon employee delegation member Plash Chandrasekha said most affected employees will be notified in February next year.

Amazon stated in a memorandum to employees on December 12 that the layoffs were “based on business needs and adjustments to local strategies.” The company said the layoff compensation plan “far exceeds industry standards.” The Luxembourg Minister of Labor's office did not comment on the layoffs.

Layoffs have been particularly difficult for expatriate employees who have moved to Luxembourg to work for Amazon. The laid-off workers from India, the United States, Australia, Egypt, Tunisia, etc. must find new jobs within three months if they want to stay in the Grand Duchy. Chandrasekha said, “I'm almost certain that some employees will have to leave. The Luxembourg job market is limited, and it is not easy for 370 people to pour into the job market at the same time.” He added that for those looking to work for big tech companies, there is no real local alternative to Amazon.

In October of this year, Amazon said its global layoffs were aimed at “reducing the level of bureaucracy, optimizing organizational structures, and allocating resources to ensure that investments are focused on the most important strategic areas,” including artificial intelligence. The company revealed that there will be more layoffs planned in 2026 and expects to limit recruitment to key growth areas.

An anonymous employee at Amazon's Luxembourg headquarters said that the expected layoffs will focus mainly on software developers because tech companies are increasingly handing over coding tasks to artificial intelligence. The employee also pointed out that after a large-scale expansion of recruitment during the e-commerce boom during the pandemic, Amazon is now downsizing its personnel.

Isabelle Scott, a spokesman for the Luxembourg Federation of Trade Unions, said: “These layoffs could have been avoided, but this is how big tech companies operate. The government is trying to attract international talent, but we see that these companies don't respect our social model that focuses on dialogue; they just copy America's 'hire and fir' model.”

The Luxembourg Federation of Trade Unions and other trade unions have pointed out that Luxembourg grants excessive tax benefits to Amazon. Similar to other foreign companies, Amazon has established a holding company in Luxembourg to coordinate European business operations through it. Using accounting standards determined as legal by the European Court of Justice in 2023, Amazon has been reporting losses on its mainland European business for a long time, thereby minimizing the tax burden. According to public records, Amazon EU Holdings, registered in Luxembourg last year, declared 70.4 billion euros (about 82.8 billion US dollars) of e-commerce sales in the EU and almost the same amount of expenses (including employee costs). In the end, the company only paid 180 million euros in profit tax.

An Amazon spokesperson said, “We have paid hundreds of millions of euros in corporate taxes in European countries and are in full compliance with local tax laws in all regions where we operate. Corporate tax is calculated based on profit rather than revenue. “We continued to invest heavily in Europe last year, leading to lower profit levels.”

Amazon has yet to announce adjustments to its layout in the modern city district of Kirchberg, Luxembourg—the company has leased several office buildings locally and prominently displayed the “customer first” concept with neon lights. Managers based in the region are responsible for coordinating the company's various operations in Europe, from e-commerce and supply chain to software development and engineering construction. Amazon usually sends US executives to Luxembourg to learn international business experience and then return to the Seattle headquarters to take on other positions.

In November, Luxembourg Prime Minister Luc Frieden met with Amazon CEO Andy Jassi in Seattle and wrote an article stressing that the company remains a “critical partner” for Luxembourg. Jasi replied, “Luxembourg has always been an important base for Amazon, and our more than 4,000 local team members have also used it as their home. Thank you for this exchange and cooperation.”