Can my LLC get taxed doing Amazon FBA in US?

[disagree]

Hey guys, I have a foreign-owned LLC in Wyoming, and I'm trying to understand if I can do FBA in US through that company.
My question is:
1) Can this be seen as US Sourced Income?
2) If yes, would this be the same also if I do FBA outside of US? Let's say in Europe?

 

[intlman]

Was a fairly common structure when I played around with FBA many, many years⁤ ago.

Is your LLC a single-member LLC?

1. I think the correct question is is⁣ this "Income Effectively Connected with a U.S. Trade or Business?". In most cases, no, it⁢ won't be. However, you may be on the hook for sales tax.

2. Europe -︀ not sure. You will most definitely have to register for and pay VAT for EU︁ sales.

This type of thing used to be discussed ad nauseam on the various FBA︂ groups (Facebook especially).

 

[daniels27]

You can check the discussion here:

Long story short,︈ some CPA claim your are taxable, while the other half claims not. There is no︉ court case and no advance ruling available. If you ship from Europe, the law pretty︊ much would stay the same as the passage of the title of ownership most likely︋ is still considered to be at the place of delivery. But also on that, there︌ are no cases.

But, if you are from Portugal or any other country with a︍ tax treaty with the US, the situation becomes crystal clear: you are not subject to︎ us taxation if you only operate a warehouse for delivery of goods in the US.️

 

[daniels27]

Yes, but some people mistakenly⁠ call it ETI which only comes after ETBUS.

If he only sells on Amazon, he won't. Amazon pays all sales tax⁣ directly.

Yes, you can see my previous posts:︀
https://www.offshorecorptalk.com/search/1120509/?q=ETBUS&c[users]=daniels27&o=dateAs mentioned many time, it is like with religion: you can believe what you︁ want as there is no way to prove anything. Even the lawyers that claim you︂ can get any tax paid back, don't comment on any case where they got anything︃ back.

 

[intlman]

Exactly!

Even 10 years ago it was confusing as hell⁤ and there was no clear definitive answer. Good to see it's still as clear as⁣ mud lol.

 

[disagree]

So it comes natural to⁣ think that for IRS all this s**t is also hard to track and their control⁢ activity is very low, given how disregarded LLC work, right?

 

[daniels27]

Exactly. That's what I wrote in the post I linked:⁠
The issue is not limited to LLCs. You can also skip the LLC, which the IRS︀ ignores in any case, and then you have it with whatever is left.

But if︁ you are from Portugal or another country with a treaty, too can file a protective︂ return and the issue is off the table. What is the company/person behind the LLC?︃

 

[disagree]

He’s from UAE

 

[daniels27]

Then no treaty. But still no reason‌ to worry.

 

[Xshore]

Amazon only pays taxes for B2C. B2B when sold to the‍ same country as as where the goods are have to be calculated and paid by⁠ the seller. B2B to other countries are zero rated, but need to file EC sales⁤ list.

The LLC is disregarded, so the LLC won't get taxed. You however could be⁢ taxed on the income, that's another discussion. And the answer as from other replies is︀ most likely no.

 

[daniels27]

Wait. This applies to EU? I thought we are talking about US sakes⁠ tax. For US, Amazon (FBA or not) collects and remits sales tax on your behalf⁤ for all relevant states including all with a FBA warehouse. Unless you also sell outside⁣ of marketplaces, you can simply ignore sales tax as it is handles for you. If⁢ the buyer is a business with sales tax exemption, they won't charge and provide you︀ with the exemption certificate in Seller Central.

 

[12345]

No, as far as I know you do not pay income tax in the US‌ while doing amazon FBA as a foreigner. You are liable for sales tax though. Please‍ read the tax treaty between US and your country. Warehouse does not qualify for PE⁠ in most cases

 

[Xshore]

Maybe originally, but someone said⁢ about Europe VAT and you replied that Amazon withholds all VAT. Maybe a misunderstanding. Anyway,︀ for Europe Amazon VAT it's good to keep in mind that you have to handle︁ B2B transactions for VAT yourself.

 

[daniels27]

He is from UAE, there is none.⁤

 

[disagree]

I cannot understand‌ how sales tax and tax treaties between US and my country are in the same‍ topic.
Sales tax is basically a tax you have to pay on each sale you⁠ made inside US, correct?

Why should I check for tax treaties?

 

[daniels27]

Yes, it is⁠ completely irrelevant for your US sales. I am not sure why the discussion opened in⁤ the first answer:
As the topic⁢ is about US, let's stop talking about it.

The discussion we usually have here is about ETBUS/USTB. As︁ mentioned, there is no agreement among CPA and lawyers. But, all US tax treaties clearly︂ state that maintaining a warehouse in the US does not make you liable to US︃ taxes. Hence, for all treaty countries, the ETBUS/USTB discussion is not relevant.

 

[cyprusbanker]

You may be very wrong if you think that anything⁠ is hard to track for the IRS!

That said, you may make it difficult for⁤ them, but not hard.