ASOS is in discussions with German tax authorities over alleged underpayments of customs duties, with the British online fashion retailer stating it considers its potential exposure to be immaterial.

The dispute concerns customs declarations on shipments crossing the German border over several years, according to reports in Reuters, Retail Gazette and the Financial Times. ASOS said it has reviewed more than 95 per cent of the tens of thousands of declarations in question and estimates the additional liability at around €500,000.

“We continue to engage with the authorities and follow the relevant legal processes and are confident of a successful conclusion of the matter,” ASOS said, adding that it is contesting the assessments and “considered the maximum exposure to be immaterial.” The company said its analysis is “fully supported by external legal counsel” and places the “actual additional liability” at about €500,000.

Four people familiar with the matter told the Financial Times that German authorities notified ASOS of an alleged shortfall earlier this year. An initial assessment reportedly put the bill in the tens of millions of euros, but the figure was expected to be reduced as the retailer supplied further information. The German General Customs Directorate said it could not comment on specific companies for legal reasons.

ASOS, which has a corporate subsidiary in Germany and has operated a distribution centre near Berlin since 2014, has been working through a broader turnaround, seeking to refresh its fast-fashion appeal to a core base of shoppers in their twenties while cutting costs in an increasingly competitive market. Last month, the company warned annual revenue would fall short of market expectations due to weak consumer demand, with profit projected to land at the lower end of its forecast range, according to Reuters.

The retailer has also faced pressure from rivals, including Shein, which has undercut prices by shipping directly from Chinese factories. In 2023, ASOS borrowed £275 million from specialist lender Bantry Bay at an interest rate of about 11 per cent, and at its interim results in May said it must remain in a positive liquidity position to avoid breaching covenants, the Financial Times reported.

ASOS said it has drafted in external advisers to validate its analysis and continues to engage with German authorities over the dispute. “We are confident of a successful conclusion of the matter,” the company said.

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