International Taxes and Fees For Global Amazon Sellers

One of the more daunting aspects of growing into an international marketplace is managing finances across multiple regions/countries. Managing foreign bank accounts, additional currencies, and various taxes/fees can be overwhelming.

In this article, we’ll provide an overview of the information you’ll need to understand about different taxes & fees. And then we’ll give a breakdown of the requirements for the United Kingdom, Canada & Germany.

Once you have experience in one new country you will be ready to replicate that success across many more.

Types of Payments

There can be many different types of payments you need to track when operating a business. Here are the ones you will see most consistently…

1. Business/Income Tax

The quarterly/yearly taxes that you will be responsible for managing in the country(s) that you are operating within.

2. Sales Tax/GST/VAT

Taxation on the individual transactions that you are processing. These are often handled automatically by Amazon. But you still need to understand it and how it impacts your margins.

3. Foreign Exchange

Foreign currency exchange can have a major impact on your cash flow profit margins. A partner such as PingPong can help you navigate international finances.

*Be sure to avoid “double exchange fees”. Double exchange fees happen when you exchange currency from one country to your local account(s), and then have to pay the fee to convert them back to pay things such as yearly taxes. You shouldn’t be transferring funds from one country to another unless you absolutely need to utilize them. You will most likely have some expenses in the originating country if you continue to operate there. *

4. Business Transaction/Banking Fees

There is a plethora of different ways to approach international transactions, but regardless of what route you take, you are going to need to make purchases/payments in the country(s) that you are selling in.

Oftentimes your bank or credit card provider will allow you to use your local accounts to make foreign transactions, but the fees can be much higher than an international account. You will also want to be sure you are not confusing various accounts payable and accounts receivable transactions if you maintain separate business identities in various countries.

Payment Deadlines

Operating in a new country can feel like running an entirely new business (especially the first one or two times). Make sure you have calendar events or some sort of reminder for tax/payment deadlines for your international businesses as well, because they may not align with your home country’s due dates.

Value Added Tax/Goods and Services Tax(VAT/GST)

Taxes in foreign countries can be particularly tricky to learn at first. Dates, rates, and even how they are calculated can vary from one country to the next. As an example, the US has sales tax. Canada has goods and services taxes that vary by region. And Europe has value-added tax that varies by not country and product type.

VAT Deadlines by country

VAT due dates and reporting frequency vary by country. Some businesses are expected to report VAT dues on an ongoing basis, and some countries only require foreign businesses to report annually. Most countries, however, require reporting on a quarterly basis with payments due soon after the end of quarter.

Requirements/accounts needed

This again varies from country to country, but most often you will need some sort of VAT number and/or business identification number to operate as a business in a given country. For example, Canada requires all businesses to have a unique BN (business number), and the UK requires all businesses to have their business registered plus a VAT number for that business.

*Some countries may also require business insurance depending on what type of business you run and the nature of your product. Be sure to check each country’s government-sponsored business registration pages and/or work with a foreign partner to fully understand what is needed before you begin operations.*

Account Types

At a minimum, you need a foreign bank account that allows you to operate within a given country or region. While it may be possible to use your local accounts, it will likely cost you a lot in fees. You need to identify a partner, such as PingPong, that can help you configure and manage an account that operates in multiple countries at minimal costs.

In addition to a bank account, more and more operations can be handled online. You will want to check if there is an option to pay taxes, register businesses, and process the necessary paperwork with an online account. This can save you a lot of time.

What to Expect

Requirements – what type(s) of legal/financial requirements and registrations do you need to prepare for to operate within a specific region/Amazon Marketplace?
Amounts – how much can you expect to pay for your product(s) in taxes and fees?
Dates – when do you need to have your taxes/fees prepared by in each region/country?
Payment Methods – how can you make payments for various fees/taxes? And what do your consumers expect to have available when purchasing your Amazon product(s)?
Tools/Resources – What tools and resources are at your disposal to help you manage your international finances?

Below are a few examples from specific countries (Canda, UK & Germany).

Canada Taxes & Fees For International Sellers

Requirements – Canada

When you start a business in Canada as a foreigner you will be known as a non-resident business owner. You are going to need access to a Canadian permanent address or partner with a Canadian resident who has one. And you will want to incorporate your business within Canada.

If you have employees/representatives operating in Canada it is possible you can qualify for a “Canadian Controlled Private Corporation” (CCPC), but you can also start a branch or subsidiary of your home country’s business within Canada. From there, you can also register for a Business Number (BN).

Amounts – Canada

GST – Goods and Service Tax, the base tax applied to most purchases in Canada.
PST – Provincial Sales Tax, a tax applied on top of or instead of GST for certain retail goods purchased for personal and/or business use.
HST – Harmonized Sales Tax, a combination of GST and PST taxes applied for certain retail goods. This is applicable in the provinces of New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island.
QST – Quebec Sales Tax, a sales tax applied in Quebec at either a base rate of 5% or 9.975% plus GST depending on the retail good.
The combination and total vary depending on which province of Canada the goods are being purchased in. FedEx provides a great overview of the actual tax rates.

Dates – Canada

Canada can be a bit tricky at first, because the GST payment due date is before the due date for filing.

For individuals operating in and receiving income from a business in Canada your balances are due on April 30th each year. And your return paperwork needs to be filed by June 15th.

Payments for corporations operating out of Canada are due 2 months after the end of your business’ fiscal year. Some exceptions change the deadline to 3 months. Filings for a tax return is due 6 months after the end of your business’ fiscal year.

Payment Methods – Canada

If you have a Canadian business bank account either yourself or through a service provider such as PingPong you should have an option to “Add a payee” under which you can pay your GST. You will be looking for a payee option such as:

Federal – GST/HST Payment – GST-P (GST-P)
Federal – Corporation Tax Payments – TXINS
Federal Payroll Deductions – Threshold 1 – EMPTX – (PD7A)
Federal Payroll Deductions – Threshold 2 – EMPTX – (PD7A)
Federal Payroll Deductions – Regular/Quarterly – EMPTX – (PD7A)

After finding your payee option, enter your 15-digit business number (BN) as an account number and pay your GST.

Tools/Resources – Canada

Non-resident business owners (importers to Canada), will need a Business Number (BN) from the Canada Revenue Agency which you can register for online.

The Canadian government provides details on paying GST via an online bank.

United Kingdom Taxes & Fees For International Sellers

Requirements – UK

To set up a UK business from overseas you are going to need to fill out a form (OS IN01) and submit it with a 20 GBP registration fee to the Companies House that manages taxes in the UK.

Next you will want to set up a business bank account in the UK, which will require a physical address in the UK. Partnering with a business that specializes in foreign exchange/banking can simplify these processes.

Finally, you will need to register and pay for National Insurance (NI) as well as register for VAT. Links to register for each are below under “Tools/Resources”.

Amounts – UK

VAT rates in the UK vary depending on the type of product/industry. The standard for items purchased in the UL is 20%. Other items have 0% VAT or are exempt. And although goods that you would sell in an online marketplace are unlikely to fall into these categories you should still track the revenue from any sales with a 0% VAT rate so that they can be included in your filings for the year.

Dates – UK

VAT in the UK is pretty simple. You need to pay VAT annually, due 2 months after the end of your fiscal year. You can choose to pay monthly or quarterly, but the total has to be resolved within 2 months of the end of the next year.

Payment Methods – UK

Just like Canada’s GST, your UK VAT bill can be paid online.

Tools/Resources – UK

Germany Taxes & Fees For International Sellers

Requirements – Germany

To operate a business in Germany, you are going to want to register your business. By far the most common option you will see is Gesellschaft mit beschränkter Haftung (GmbH), which is functionally similar to a limited liability company (LLC) in the US.

Next, you will need to register for a few different taxes in Germany. There is a municipal trade tax (Gewerbesteuer) which is collected by local governments based on your business profits. VAT (Mehrwertsteuer) which covers the entirety of your distribution and sales process and is most commonly added to the product purchase. And if you have incorporated your business there is a corporate tax (Körperschaftsteuer).

For everything listed above, you will need a German bank account as well.

Due to the relatively high number of taxes to track and process it is recommended that you work with a business or financial institution that can help you navigate payments owed in Germany.

Amounts – Germany

The municipal tax varies a bit by region but is usually about 18% of profits that your business earns.

The VAT depends again on the product you are selling and varies from 19% to 7%.

Corporate taxes are roughly 15% of earnings for businesses that have incorporated. However, you can deduct all business expenses for your German business from the corporate tax, which includes the municipal tax listed above.

Dates – Germany

Your business tax returns need to be submitted by May 31st each year, and cover the previous calendar year.

Payment Methods – Germany

You can pay German taxes with a few different services online, and may even want to check with the financial institution to see if they provide options. Oftentimes it is the same place that you registered for taxes initially that you need to file and pay any balance owed on returns.

Tools/Resources – Germany

German Federal Chamber of Tax Consultants or the German Association of Tax Advisors are both resources to find assistance with navigating Germany tax.

Simplifying Taxes & Fees For International Marketplaces

To operate a global business, you need to manage foreign business expenses, financial management, foreign exchange, and taxation. Finding a partner that specializes in all this will help you navigate these intricate and critical business functions. So instead of managing foreign banking, you can focus your time on building your online listings and selling your product(s).

You don’t need to configure and organize your international finances on your own. PingPong has experts standing by to help you set up an account and begin your expansion to new Amazon Marketplaces in 1 day. Create your free account with PingPong today.

Resources

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