Main Title
One Stop Shop: The biggest tax issues for Amazon sellers 2022
Duties as an Amazon Seller
Once you sell products through Amazon as a merchant, you're classified as an entrepreneur and must pay taxes. This creates several obligations:
- Register as an entrepreneur for sales tax purposes
- Submit regular sales tax returns
- File an annual income tax return
Tax Issues You Need to Face
Amazon merchants must understand that while Amazon charges various fees (such as 2.9% for credit card processing), "Amazon does not charge an explicit 'sales tax fee' for remitting taxes." Sellers remain responsible for ensuring tax IDs connect properly to their accounts and each listing has appropriate tax codes.
Key points:
- Sales taxes must be paid regularly
- Income tax filing is required annually
- In the US, Amazon acts as a marketplace facilitator in most states, collecting and remitting sales tax on sellers' behalf
- This simplifies compliance for many US-based sellers, though nexus obligations across multiple platforms remain important
For international sellers, the situation grows more complex. Income tax liability typically centers on the company's home country, but "cross-border sales and operations can trigger income tax obligations in other countries" based on permanent establishment rules.
The One Stop Shop (OSS) Explained
Since July 2021, the OSS became central to EU VAT reform for e-commerce. It functions as "a single point of contact" allowing merchants to declare and pay VAT across all EU member states through one online portal in their home country.
Key benefits:
- Eliminates multiple VAT registrations across individual EU states
- Uses an EU-wide 10,000 Euro distance sales threshold (replacing previous country-specific thresholds of 35,000 Euro)
- Covers all B2C supplies and distance sales within the EU
The Positive Changes from OSS
The OSS introduced significant simplification by establishing "a single, EU-wide distance selling threshold of 10,000 Euro." Previously, sellers needed separate VAT registrations once they exceeded country-specific thresholds. Now, "all EU companies selling goods remotely to consumers in other EU member states" apply one unified threshold.
Who Won't Benefit from OSS
The OSS has important limitations:
Excluded scenarios:
- B2B deliveries cannot be reported via OSS
- Companies using fulfillment centers in multiple EU countries still need local registrations
- Amazon Commingling transactions increase complexity
- B2C deliveries within your own country aren't reported through OSS
"Many future developments were not considered enough in the regulations," particularly regarding fulfillment structures like Amazon FBA where goods are stored across multiple EU countries.
Additional US Tax Changes
For US sellers, significant updates include:
- Amazon's role as marketplace facilitator simplifies sales tax collection in most states
- The "1099-K reporting threshold" dropped drastically to $600 annually (from previous $20,000 threshold and 200 transactions)
- This change requires "meticulous record-keeping" from nearly all active Amazon sellers
Conclusion: Biggest Tax Issues
While OSS simplifies VAT compliance for EU cross-border B2C distance sales, "it doesn't solve all international tax complexities." Sellers using multiple fulfillment networks or engaging in B2B sales still face additional VAT registrations.
Key recommendations:
- Hire a qualified tax advisor specializing in e-commerce and cross-border taxation
- Understand nexus obligations across all relevant jurisdictions
- Evaluate whether OSS benefits your specific business model
- Recognize that OSS is beneficial but not mandatory for all scenarios