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Tax Considerations

Sellers who market their products internationally must take great care to comply with all tax considerations and regulations in each country. The tax requirements may have practical and legal ramifications on how the seller’s products are handled in the given country. Sellers should investigate the regulations regarding the following issues before embarking on sales in a foreign country:

  • Markings and labels.
  • Product compliance.
  • Intellectual property rights.
  • Environmental, health, and safety concerns.
  • Export controls.
  • Tax and customs.
  • Parallel importation.

Note: Sellers should consult the tax authority or a tax expert to be certain of the regulations in each country.

United States Tax and Regulatory Concerns

Amazon requires taxpayer identification from all professional sellers, and from individual sellers who have more than 50 transactions in a calendar year. All United States third-party sellers who are U.S. taxpayers must file Form 1099-K with the Internal Revenue Service (IRS) if they make more than $20,000 in unadjusted gross sales from more than 200 transactions. Third-party sellers who are not U.S. taxpayers file Form W-8BEN instead, attesting to the fact that they are exempt from the reporting requirements of the IRS. Sellers may provide Amazon with their tax information in Seller Central, under Legal Entity in Account Info, or via a self-service interview process.

Note: The IRS requires U.S. taxpayers to have a Taxpayer Identification Number (TIN) – usually a Social Security Number (SSN) or an Employer Identification Number (EIN).

Sellers are responsible for compliance with U.S. customs requirements and other regulations, including the payment of import duty and taxes. To determine which items entail import taxes and which require special permits, licenses, or the like, see the following resources:

Note: Sellers who import items have an importer number, which is either a personal Social Security Number or an IRS business registration number. Any seller who does not have either of these numbers should file Form 5106_0.pdf?ld=EL-pages.amazonservices.comAS CBP Form 5106.

Sellers who bring products into the United States via commercial carriers enter the merchandise via the Importer of Record (IOR) – the seller, the buyer, an authorized employee of the seller, or a designated, licensed customs broker. Custom brokers represent importers (the sellers) in all matters pertaining to customs, charging fees for the services provided. Customs brokers are obtainable via the U.S. Customs and Border Protection regulations, by state and city.

Note: Non-resident IORs must appoint a resident agent, file an import entry number, and acquire an IOR number. Sellers must make sure that they are not violating intellectual property rights when they list their imported items in the United States. For example, products listed may not be counterfeit. Any seller who lists prohibited items is subject to losing selling privileges with Amazon.

Note: Other resources regarding tax requirements in the United States include the Amazon Tax Information Tutorial and the IRS Guidelines for Payment Card and Third Party Network Transactions.

Canadian Tax and Regulatory Concerns

Sellers to Canada pay taxes, customs fees, and destination duties before Canadians may buy the sellers’ products. Moreover, until these sums are paid, sellers may not use Amazon’s Canadian Fulfillment Centers. All non-resident importers to Canada must become Non-Resident Importers (NRI), entities that do not have permanent residence in Canada, but are thus established as importers, using their own name and business number (BN) – a number that must be acquired before importing the first time.

Note: Sellers who would like to acquire a BN should call 1-800-959-5525, register online here, or fill out Form RC1, a Request for a Business Number (BN), and send it to the closest Tax Center. Accounts are free of charge.

Canadian imports are generally taxed at 5%, and if duties are levied, then the sum total including the duty is taxed. Sales made through the Amazon.ca website may also require the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST). How frequently a seller files for the taxes collected depends on the volume of transactions conducted annually, but even the low-volume sellers must file yearly.

Note: Sellers must register with the Canada Revenue Agency to receive an importer number and then to complete GST registration. Registration is free of charge.

European Tax and Regulatory Concerns

The most important things to know about taxation in the European Union is how Value Added Tax (VAT) is applied to online purchases, and that each country has its own customs regulations. Beyond that, the formation of the EU has streamlined the challenges of selling to multiple countries, as most of the countries of the EU may be handled from one account.

VAT is assessed according to the value determined for goods and services that will be used or consumed in the EU; it is considered a “consumption tax.” In this way, products that are sold to buyers outside of the EU are usually not subjected to paying VAT. Conversely, imports to the EU are often taxed, despite the absence of VAT in the items’ country of origin. The minimum standard VAT is at a rate of 15%, with the possibility of a reduced rate of 5%, but specific rates vary by product and country. Sellers should determine the specific VAT rate in the countries in which they market their products, and may need to apply for a unique VAT registration number in each country (this can usually be done online). After sellers collect VAT from their buyers, they turn around and submit those funds to the tax authority.

Note: Sellers should consult tax advisors for assistance with complying with VAT regulations, particularly those sellers who register for VAT in multiple countries.

Those sellers who sell between different countries that are members of the EU are considered to be “distance selling.” Sellers who conduct a given amount of business in each country – with the “distance selling threshold” in Euros determined by each country, and established for each country – may need to register for VAT in both countries.

For assistance in selling their products in Europe and in handling VAT, sellers are encouraged to see the resources below for each country of the EU:

Europe (at large) Taxation and Customs Union
France Foreign Companies: Your Tax Obligations in France
Germany Federal Ministry of Finance
Italy Agenzia Entrate (Italian)
Spain Agencia Tributaria (Spanish)
United Kingdom Imports and Purchases from Abroad: Paying and Reclaiming VAT

Amazon recommends webinars from third-party tax advisors for those sellers facing the challenges of taxation in the EU, including the following:

Sellers who sell their products in Europe must comply with all of the customs regulations throughout Europe. Among these regulations are the requirements to make sure that the products sold do not violate intellectual property rights. The rules in one country may not be the same as those in another – copyright licensing may be specific to one country, for example – and it falls on the sellers to make sure that they are in complete compliance. Sellers should also take utmost care to make sure that the products they import are not counterfeit. To investigate the parameters of intellectual property issues in Europe, sellers should view the resources below:

France INPI (French)
Germany GRUR (German) German Patent and Trademark Office(English)
Italy Ufficio Italiano Brevetti e Marchi (Italian)
Spain Propiedad Intelectual (Spanish)
United Kingdom Intellectual Property Office

Sellers should be aware that owners of trademarks may be able to prevent the sale of products from outside of the European Economic Area (EEA), even if the sellers are authorized to market the items in the country of origin. Trademark owners may consent to the sale of the individual, specific products to which they own the trademark. Once a trademark owner consents to the sale of those items within the EEA, however, the trademark owner’s rights are considered to be “exhausted,” and may no longer be enforced.

Trademark owners may want to restrict the resale of the products in the EEA for the following reasons:

  • The seller (re-seller) may have changed the branded goods.
  • The seller (re-seller) may have repackaged the branded goods.
  • The seller (re-seller) may have advertised the branded goods in ways that denigrate the products themselves or the trademark.

Note: Amazon’s sellers are encouraged to consult legal experts to determine whether their products may be sold in the EEA without trademark infringement.

Products in Europe are marked differently from those in the United States as well – for example, the mandatory “CE” mark that attests to conformity with European regulations. Sellers should investigate the regulations in any target country to be sure that all markings on their products comply with the country’s requirements.

Standards for labels and other markings for the different countries of Europe are best found by referring to the resources below:

Europe EU Standards and CE Marking CE Conformity Marking Marketing of Products – CE Conformity Marking
Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (French)
Germany IXPOS: The German Business Portal
Italy CE Marking (Italian)
Spain Marcado – CE (Spanish)
United Kingdom European Commission Product Directive

Other regulations that sellers should investigate in Europe pertain to the environment, as well as the health and safety standards of the given country. Sellers who market any of the following products should make sure that they are functioning in compliance with the various European regulations:

  • Batteries (sold together with other products or separately)
  • Chemicals
  • Cosmetics
  • Electrical and electronic equipment (including voltage and plugs)
  • Food
  • Medical devices (must comply with the European Medical Devices Directive)
  • Pharmaceuticals
  • Toys

Note: Sellers must also make sure that the packaging of their products complies with the European Packaging and Packaging Waste rules.

Japanese Tax and Regulatory Concerns

Sellers who seek to market their products in Japan must be aware of the requirements for non-residents, as well as tariffs, duties, and prohibited goods.

Non-resident sellers who would like to use Fulfillment by Amazon (FBA) through a Japanese fulfillment center must designate a proxy agent (often an attorney) to the Director-General of Customs before they begin the process of importing any goods. The agents then import the products on the sellers’ behalf. Sellers who need the full details of Japan’s policies with regard to customs should look here.

All goods imported to Japan are subject to the Import Consumption Tax, and some products are also subject to customs fees. Products may also be subject to an excise tax – particularly for tobacco products, liquor, and gasoline (petroleum). Taxes are generally calculated based on the quantity imported.

Labeling requirements are strict in Japan. In particular, electrical appliances must attain the standards detailed in the Electrical Appliance and Material Safety Law. Hazardous products may not be sold, for example. Sellers whose products emit radio frequencies must make sure that the products have a Technical Conformity Mark, attesting to their compliance with the rules of the Radio Law.

The Consumer Products Safety Act requires that some products have a PSC mark, attesting to their safety. Examples of such products are pressure cookers, baby beds, oil heaters, and built-in electric dishwashers.

The Household Goods Quality Labeling Law dictates what information must be displayed on product labels so that buyers are able to make informed decisions towards purchase. Examples of products that are subject to this law are textiles, electrical appliances, and plastic manufactured goods. Food products – especially those intended for infants and small children – must comply with the Food Sanitation Act. Food labeling also covers ingredients, nutritional information, and so on. Similarly, pharmaceuticals and medical devices must meet the regulations of the Pharmaceutical Affairs Act.

Japan prohibits the importing of the following goods:

  • Articles that violate intellectual property rights.
  • Books, drawings, carvings, or any article that may be considered obscene or immoral, and therefore at risk of harming morals or public safety.
  • Child pornography.
  • Counterfeit coins, paper money, bank notes, securities, and credit cards.
  • Explosives (dynamite, gunpowder, and the like).
  • Firearms, ammunition, and pistol parts.
  • Germs that might be used for bioterrorism.
  • Narcotic drugs: heroin, cocaine, MDMA, cannabis, stimulants, psychotropic substances, opium, and other narcotic drugs (except for those permitted by Ministry of Health, Labour and Welfare Ordinance).
  • Precursor materials for the building of chemical weapons.

Note: Sellers are responsible for making sure that they are in compliance with Japanese regulations and fees.

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