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]

disagree23 said:
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?
Click to expand...

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 EU sales.

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

 

[daniels27]

disagree23 said:
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?
Click to expand...

You can check the discussion here:
[COLOR=#ea80fc] D [/COLOR]

Post in thread 'Conflicting Infos between CPAs on my US LLC and US Taxes as a Non-Resident Alien (Self-Publishing on Amazon) Should I pay US taxes or not?'​

Mar 30, 2024

uplana said:
how would you check that on Google?
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https://www.google.com/search?q=fba+engage+in+trade+or+business
ETBUS
https://www.quora.com/As-a-UK-regis...to-pay-any-kind-of-tax-in-US?top_ans=87290762https://www.justanswer.com/tax/by747-morning-just-wondering-foreign-seller-amazon-fba.htmlhttps://nvinc.com/us-tax-responsibilities-for-non-resident-e-commerce-sellers/https://www.andrewmitchel.com/blog/2017_08_belize-ibc-selling-through-amazon-fba...

• daniels27

[COLOR=#ea80fc] D [/COLOR]

Post in thread 'Singapore Sole Proprietorship - Anyone done it?'​

May 12, 2024

dogprince said:
About 30 percent of my customers are American. My understanding is that will make me tax liable in the US (ETOB and ECI). I sell digital software (downloads).
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TheCryptoAnt said:
Selling to Americans (even if 100% of your customer base), doesnt qualify as PE.
Check the IRS website.
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ETBUS=ETOB is not the same concept as PE. You could have no PE but still be considered ETBUS.

Yes, we had this discussion a few times and it is a nightmare as IRS does neither sue nor do any advance ruling. But this also means in return, that they take the free tax of the 50% confused people that believe the 50%...

• daniels27

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

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

 

[daniels27]

intlman said:
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.
Click to expand...

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

intlman said:
2. Europe - not sure. You will most definitely have to register for and pay VAT for EU sales.
Click to expand...

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

intlman said:
This type of thing used to be discussed ad nauseam on the various FBA groups (Facebook especially).
Click to expand...

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 you want as there is no way to prove anything. Even the lawyers that claim you can get any tax paid back, don't comment on any case where they got anything back.

 

[intlman]

daniels27 said:
As mentioned many time, it is like with religion: you can believe what you want as there is no way to prove anything. Even the lawyers that claim you can get any tax paid back, don't comment on any case where they got anything back.
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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]

daniels27 said:
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 you want as there is no way to prove anything. Even the lawyers that claim you can get any tax paid back, don't comment on any case where they got anything back.
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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]

disagree23 said:
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?
Click to expand...

Exactly. That's what I wrote in the post I linked:

daniels27 said:
Yes, we had this discussion a few times and it is a nightmare as IRS does neither sue nor do any advance ruling. But this also means in return, that they take the free tax of the 50% confused people that believe the 50% of the lawyers and CPA that recommend paying the tax.
Click to expand...

The issue is not limited to LLCs. You can also skip the LLC, which the IRS ignores in any case, and then you have it with whatever is left.

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

 

[disagree]

daniels27 said:
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 IRS ignores in any case, and then you have it with whatever is left.

But if you are from Portugal or another country with a treaty, too can file a protective return and the issue is off the table. What is the company/person behind the LLC?
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He's from UAE

 

[daniels27]

disagree said:
He's from UAE
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Then no treaty. But still no reason to worry.

 

[Xshore]

daniels27 said:
If he only sells on Amazon, he won't. Amazon pays all sales tax directly.
Click to expand...

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.

disagree said:

Can my LLC get taxed doing Amazon FBA in US?​

Click to expand...

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 is most likely no.

 

[daniels27]

Xshore said:
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.
Click to expand...

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 you with the exemption certificate in Seller Central.

Last edited: Sep 30, 2024

 

[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]

daniels27 said:
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 you with the exemption certificate in Seller Central.
Click to expand...

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 handle B2B transactions for VAT yourself.

 

[daniels27]

12345 said:
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
Click to expand...

He is from UAE, there is none.

 

[disagree]

daniels27 said:
He is from UAE, there is none.
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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]

disagree said:
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?
Click to expand...

Yes, it is completely irrelevant for your US sales. I am not sure why the discussion opened in the first answer:

intlman said:
2. Europe - not sure. You will most definitely have to register for and pay VAT for EU sales.
Click to expand...

As the topic is about US, let's stop talking about it.

disagree said:
Why should I check for tax treaties?
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The discussion we usually have here is about ETBUS/USTB. As mentioned, there is no agreement among CPA and lawyers. But, all US tax treaties clearly state that maintaining a warehouse in the US does not make you liable to US taxes. Hence, for all treaty countries, the ETBUS/USTB discussion is not relevant.

 

[cyprusbanker]

disagree said:
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?
Click to expand...

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.