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When you haven’t heard of the term “one stop shop” yet, here’s your chance to do so. We hope you are also ready for some problems and hurdles that come along with the whole tax topic.
If there is one topic in the world that makes most people fall asleep or just creep out: It’s taxes. But we all have to care about them. And if we don’t do that, we face big tax issues and general problems.
That is especially the case for international Amazon sellers.
Now we will go into detail and figure out together which problems and hurdles there are and what this term is all about. But at first, we want to present you your duties as a seller. So, stay tuned!
Duties as an Amazon seller
In your domicile state you have to face some tax issues at first before you can lean back and enjoy your life as a seller.
As soon as you sell products via Amazon as a merchant, you are seen as an entrepreneur and need to pay taxes. This comes with problems and hurdles, especially if you haven’t heard yet of any tax rules.
The first of your hurdles will be to register as an entrepreneur for sales tax issues. Then you have to regularly submit sales tax returns. We are sorry to say, but there are more problems. Because you also have to submit an annual income tax return.
Tax issues you need to face
From a tax perspective, there are plenty of hurdles and problems, also when it comes to reducing costs in online retailing. The reason for this: the tax law holds a lot of pitfalls for online merchants.
Amazon merchants need to consider that Amazon handles various fees for sellers. While a 2.9% fee might be associated with credit card processing or specific pay-by-transaction rates, it’s important to clarify that Amazon does not charge an explicit „sales tax fee“ for remitting taxes. The sales taxes collected belong to the tax authorities. Merchants are responsible for ensuring their tax IDs are correctly linked to their Amazon accounts and that each listing has the appropriate tax code, so products are taxed accurately.
In addition, you have to pay sales tax and income tax regularly. If you forget you will face tax issues like a delay surcharge. However, for sales tax in the US, Amazon now acts as a marketplace facilitator in most states, collecting and remitting sales tax on behalf of sellers. This significantly simplifies sales tax compliance for many US-based Amazon sellers, though sellers must still understand their overall nexus obligations, especially if they sell on multiple platforms.
But we also have some good news: Income tax can be simpler for businesses operating solely within their domicile. However, for those expanding internationally, the situation is more complex. While a company’s profit might be primarily taxed in its country of residence, cross-border sales and operations can trigger income tax obligations in other countries based on permanent establishment rules or bilateral tax treaties. This means that while your primary corporate income tax might be in Germany, generating income in other countries could lead to additional income tax liabilities depending on the specific legal and tax structures in place.
But the situation is a bit different concerning sales tax (or VAT in the EU). For online merchants, it does not only matter where the company is registered or from where the goods are sent to the customer. Modern sales tax and VAT regulations, especially the EU’s One Stop Shop (OSS) and US economic nexus laws (post-Wayfair decision), increasingly focus on **where the customer is located** and the volume of sales into a specific jurisdiction. This means sellers often have tax obligations in the customer’s state or country, regardless of where their warehouse is situated.
Enough with problems and hurdles…?
This basic rule, according to which sales tax for mail-order companies is always payable in the country where the goods are stored, has been significantly updated by recent legislation. While historically simple, for online retailers, this old rule has given way to more complex sales tax issues that require careful attention in modern accounting and tax consulting. So this is another of the many hurdles for online retailers.
Moreover, another of the many problems and hurdles will be the tracking of the VAT payment load for each country and that there is enough cash on the account at the time of the payment. This is why solutions like the EU’s One Stop Shop (OSS) were introduced.
So, actually the one stop shop should be a facilitator for companies that ship products from a warehouse to EU states to the customer. Therefore, it should make the tax issues a bit more bearable.
Now we come to the big question: Does the one stop shop really fulfill its promises?
The one stop shop
It almost sounds like a tongue twister, but it’s in fact an important point when it comes to tax issues. Since July 2021, the One Stop Shop (OSS) scheme has been a core part of the EU VAT reform for e-commerce, and it continues to be a central mechanism for EU B2C sales.
But what does the One Stop Shop mean for you as an Amazon seller?
Within the One Stop Shop, it is all about the administration and preparation of the data and data provision for your tax advisor, allowing you to declare and pay VAT across all EU member states through a single online portal in your home country.
This already sounds really complicating, but we will explain the one stop shop and everything that is connected with it step for step.
In Germany, for example, you have to pay your taxes regularly; and your German tax advisor needs your data to do the tax return.
SPACEGOATS tip: as an Amazon seller, it is really advisable to hire a tax advisor if you have not had any experience in this area yet. Otherwise, you may face many tax issues, general hurdles or other problems. Given the current complexities with cross-border taxation, economic nexus rules, and varying VAT regimes, a specialized e-commerce tax professional is an invaluable asset.
Now, we want to show you the most important facts about the One Stop Shop: It’s like a platform, provided in Germany by the Federal Central Tax Office, intended as a single point of contact. The goal: To ensure VAT compliance for distance sales within the EU. Furthermore, it is not mandatory for all sales scenarios, but highly beneficial for simplification.
That means that online merchants who have to pay taxes in other EU countries due to their cross-border sales can report their sales collectively with One Stop Shop.
So far so good, but we will come back later to the problems and hurdles concerning the One Stop Shop.
And how was the situation with the One Stop Shop until July 2021?
Up to this point, country-specific delivery thresholds of typically 35,000 Euro (average value) applied to distance sales in the EU. If the turnover was below this value, sellers often had no obligation to register in other EU countries.
However, if a seller exceeded this amount, he or she had to register for VAT, obtain an identification number, and pay their taxes in the respective country. So, up to now, Amazon merchants had to endure many tax issues and also high costs associated with multiple VAT registrations.
Until July 2021, the Mini One Stop Shop (MOSS) existed as an electronic method to pay VAT in a single Member state, but that was only reserved for service providers, for example in the telecommunications field.
The “positive” change has come…?
These hurdles were intended to be changed with the introduction of the One Stop Shop (OSS) in July 2021. The standards of this scheme have an effect on delivery thresholds, taxation of goods sold in distance sales, obligation to register for VAT, and the deduction of VAT.
Now this One Stop Shop scheme was extended to cover all B2C supplies of services and distance sales of goods within the EU for businesses not established in the Member State of consumption. It introduced a single, EU-wide distance selling threshold of 10,000 Euro. This significantly lowered the threshold for requiring VAT reporting in other EU countries compared to the previous country-specific thresholds.
The biggest change that the One Stop Shop brought is that the old country-specific thresholds for distance sales have been abolished. Instead, all EU companies selling goods remotely to consumers in other EU member states now apply the EU-wide 10,000 Euro threshold. This threshold covers all cross-border B2C sales within the EU.
And the consequence: If your total EU-wide distance sales exceed 10,000 Euro, you are now liable for VAT in the customer’s country. The OSS allows you to declare and pay all this VAT through a single return filed in your home country, removing the need to register for a VAT number in each country to which you deliver but where you do not store any product.
At first, this sounds like a huge simplification for retailers because the VAT reports can be handled centrally for EU countries via One Stop Shop of the country in which they are based. It reduces administrative burden by eliminating the need for multiple VAT registrations and filings across individual EU member states.
But as good as it sounds, the One Stop Shop means some new considerations and effort for online merchants in terms of data preparation. Additionally, it also brings some risks because, for some, the declaration might still involve complex manual data entry, requiring merchants to prepare their data structure for reporting and differentiate into transaction types by country and VAT rate. While the intention is simplification, the initial data structuring and internal process adjustments can be demanding.
Furthermore, the technology for seamless integration with accounting systems is still evolving. Because: For whom does the One Stop Shop bring simplification? Primarily for companies that make cross-border distance sales within the EU from a single central warehouse. As a result, the OSS is a significant simplification for those who ship products to consumers from a single central warehouse in other EU countries, effectively addressing the problem of multiple VAT registrations.
Who won’t benefit from OSS
However, the One Stop Shop solution will only benefit Amazon sellers who do not use fulfillment centers in other EU countries, or whose goods are not stored there. It will only be easier for companies that ship products to end consumers from a single central warehouse and maintain little to no physical nexus in other EU states.
B2B deliveries cannot typically be reported via One Stop Shop; these transactions usually remain subject to the reverse charge mechanism or local VAT registration rules. In this case, everything remains as before with local reports in the origin country or the country where the supply takes place. Moreover, B2C deliveries within the own country are not reported via OSS, but as usual, through the domestic VAT return.
Especially, the Amazon Commingling transactions (which enables the merchant to process a customer order more efficiently by fulfilling from various storage locations, potentially including other sellers‘ stock) increase the complexity under VAT law and cannot be fully managed via OSS if physical stock movements trigger local VAT registrations.
More problems and hurdles with the one stop shop
Many future developments were not considered enough in the regulations. For example, the fulfillment structures of Amazon (such as FBA where goods are stored in multiple EU countries) or the sale products to other businesses (B2B) are not (fully) covered by One Stop Shop. If goods are stored in fulfillment centers in multiple EU countries, local VAT registrations in those countries are still required, making the OSS only cover the final leg of the sale to the consumer.
As a consequence, companies that use fulfillment services like Amazon FBA or engage in B2B transactions often have to deal with multiple sales tax/VAT registrations and different sales tax rates in the specific countries more frequently, in addition to using the OSS for eligible distance sales.
Furthermore, in the US, Amazon’s role as a marketplace facilitator simplifies sales tax collection for sellers in most states. However, this doesn’t eliminate all seller responsibilities, especially for multi-platform sellers who might establish economic nexus in states outside of Amazon’s facilitated collections. Another significant update for US sellers is the **lowering of the 1099-K reporting threshold**. As of the 2024 tax year (filed in 2025), Amazon (and other payment processors) will issue 1099-K forms to sellers whose gross sales exceed $600 annually, a drastic reduction from the previous $20,000 threshold and 200 transactions. This means nearly all active Amazon sellers will now receive these forms, increasing transparency for the IRS and requiring meticulous record-keeping.
Conclusion: Biggest tax issues
Yes, we know there are many problems and hurdles coming alongside the tax topic. While the One Stop Shop (OSS) significantly simplifies VAT compliance for EU cross-border B2C distance sales, it doesn’t solve all international tax complexities. For many Amazon sellers leveraging fulfillment networks in multiple countries or engaging in B2B sales, additional VAT registrations and local compliance remain necessary. In the US, the marketplace facilitator laws have eased the burden of sales tax collection for many, but the updated 1099-K reporting threshold of $600 demands more rigorous financial record-keeping from almost all sellers.
Therefore, Amazon sellers should proactively inform themselves about the advantages and disadvantages of various tax schemes like the OSS and carefully evaluate their specific business model. Yes, there are significant opportunities for simplification, but also specific risks and persistent complexities. It’s crucial for sellers to understand their nexus obligations (both physical and economic) across all relevant jurisdictions.
If you know about each aspect and consult a qualified tax advisor specializing in e-commerce and cross-border taxation, you can greatly benefit from these systems and navigate the intricate tax landscape effectively. Remember: while the One Stop Shop is not mandatory for all sales scenarios, understanding when and how to utilize it, alongside other local tax obligations, is key to successful and compliant global selling.
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