All about taxes for Amazon FBA Sellers
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You plan on becoming an Amazon FBA Seller? Then it’s very important to know how to register and how to deal with your taxes. At first, the complex German tax law might seem very confusing. But no need to worry, we give you all the information you need on how to successfully start your Amazon Business in this article.
Amazon Seller: Your taxes at a glance
Since very few Amazon sellers register an enterprise like a GmbH, we will limit ourselves to all the information you need as an Einzelunternehmer (sole proprietorship) in this article. With a GmbH, the topic is much more complicated and you should definitely consult a tax advisor if you would like to start such a business.
💡 Tip from Accountable: You are not sure whether you should register a GmbH? You will find the answer in this article!
The income tax return is filed annually and the tax must be paid to the Finanzamt (tax office). As the name suggests, the amount refers to your income, i.e. your profit (income minus expenses).
But in Germany, you only need to pay tax on your profit, if it exceeds the Grundfreibetrag (tax free amount) of 9.744€ (as of 2021). For married couples, this amount doubles to 19.488€. If you make more than this tax-free amount, you need to pay tax on your profits every year. How much you will have to pay depends on your profit, it determines your so called Steuersatz (tax rate).
If you make 9.740€ (as of 2021), your income tax is 0€. As soon as you earn more, your Steuersatz changes and you have to pay income tax, for example when your annual income is 12.000€, the income tax is already 366€. With an income of 39.000€, your tax will be 7.990€. The top tax rate is 42%, it applies to all annual income that is higher than 57.919€. This means, that every Euro above this limit is taxed at a rate of 42%.
💡 Tip from Accountable: Even if your profit is below 9,744€, you must file a tax return, even though you don’t have to pay taxes. This is the only way you can prove to the Finanzamt that your income is really below the tax-free amount.
In case you’r not taking advantage of the Kleinunternehmerregelung (small business regulation), you have to pay VAT and list it on your invoices. It is payed either monthly or quarterly to the Finanzamt (finance office). The VAT rate can be 19% or 7%, depending on the sold product. The reduced tax rate of 7% applies for example on the following products:
- Food and certain beverages
- Agricultural products
- Books and magazines
If your products are not part of one of these groups, you pay the full VAT amount of 19%.
💡 Tip from Accountable: You want to know more about the different tax rates? Here we explain it in more detail.
Amazon FBA Seller – Your Tax-Checklist
These are the most important aspects to be aware of and to prepare, before you start working as Amazon FBA Seller and after you are already selling goods via Amazon.
Before you start
- Does the Kleinunternehmerregelung apply to you or do you have to pay regular tax?
- Apply for your Steuernummer (tax number) and Umsatzsteuer-ID (VAT-ID)
- Apply for the Steuerbescheinigung 22f (tax certificate 22f)
- Register your Umsatzsteuer-ID in your Amazon Seller account
- Safe your Steuerbescheinigung 22f in your Amazon Seller account
When you start selling
- Keep track of your bookkeeping
- Schedule an appointment with a tax advisor, if necessary
- File your Umsatzsteuervoranmeldung (advance VAT return), if required
- File your annual income tax return
Kleinunternehmerregelung for Amazon Sellers
When you take advantage of the Kleinunternehmerregelung, you are exempt from paying VAT. In this case, you don’t need to worry about the Umsatzsteuervoranmeldung.
For freelancers, the Kleinunternehmerregelung can be very helpful, as it simplifies their tax return. For Amazon Sellers however, this rule makes less sense. This is why:
1. Many Amazon Sellers import goods from abroad
In general, when you import goods from another country to Germany, you have to pay the so-called Einfuhrumsatzsteuer (import sales tax). In order to do this, you need an Umsatzsteuer-Identifikationsnummer (VAT identification number) and are automatically subject to the EU VAT regulations and the Reverse Charge procedure.
When you import goods from a Drittland (third country), meaning a country that’s not in the EU, you have to pay VAT on all purchased goods, i.e. on the total price. As a Kleinunternehmer you will not be refunded this amount.
2. Regulations for the Kleinunternehmerregelung
You can make use of the Kleinunternehmerregelung if you didn’t earn more than 22,000€ in the first year you registered as self-employed. What many don’t know: This limit decreases with the months, so if you start your business in September, you may only earn 7.333€ during the rest of the year.
So, if your margin is 25%, you would only make about 1.833€ in profit with an income of 7.333€ in one year. For the effort you have, it’s hardly worth it.
Apply for a Steuernummer and Umsatzsteuer-ID
In any case, when you want to become an Amazon Seller you need to register as self-employed with your Finanzamt, this way, you will receive your Steuernummer (tax number) and your Umsatzsteuer-ID (VAT-ID). You will need both numbers for general communication with the Finanzamt and especially for your VAT submission.
You can apply for both numbers using the same form, called Fragebogen zur steuerlichen Erfassung (questionnaire for tax registration). The Fragebogen can be submitted online, so it’s easy to give all needed information and register your business. Just make sure you state that you wish to also receive an Umsatzsteuer-ID, next to the Steuernummer. After a few weeks you will receive both numbers by mail.
💡 Tip from Accountable: You can easily fill in and submit the ‘Fragebogen zur steuerlichen Erfassung’ online via our Website. Find the form here!
In addition, a Steuerbescheinigung (tax certificate) is mandatory to be able to sell on Amazon. This Steuerbescheinigung 22f proves, that you, as an entrepreneur, always pay your taxes according to the rules. You can request this document directly from your Finanzamt and then upload it to Amazon.
Income tax return for Amazon Sellers
In your annual income tax return you state the expenses and revenues of your company. An important part of your tax return is the Einnahmenüberschussrechnung, short EÜR (profit and loss statement). It determines your tax rate and how much taxes you need to pay.
If you prepare your tax return by yourself, the deadline is July 31 of the following year. In case you work together with a tax advisor, the tax return must be submitted until February 28/29 of the year after next.
What’s to consider when importing goods from abroad?
Nowadays, there are alls sorts of goods that are produced very cheaply and in huge amounts in other countries, like China. Besides many companies with websites that export directly from abroad, you can also import products from different countries for little money, that you find on eBay or other auction websites. This sound tempting of course, but what about taxes and customs costs when you buy products from other countries this way?
Import sales tax – The Einfuhrumsatzsteuer
An important tax you need to keep in mind when importing goods is the Einfuhrumsatzsteuer (import sales tax). It can be considered as a form of VAT for countries outside the EU. There is no VAT on the product in the country it was exported, but VAT must be payed in the country that imports. This tax rule prevents, that the product goes to the final consumer without VAT. The tax is due for the total price, including for example, costs for packaging. As in most cases, imports are not payed in Euro but in Dollar, so the amount needs to be converted into Euro. As German customs are responsible for this tax regulation, they determine the exchange rate.
Customs duties for products above 150€
Goods that cost less that 150€ are free from customs duties (but not of import tax). For larger and more expensive orders, you need to research the respective customs duties, which differ depending on the type of goods. There is a percentage rage between 0% and almost 18%, so it is recommended to visit the website of German customs for detailed information about certain products and tax rates.
Even though at first it seems very easy to become an Amazon FBA Seller, there are a number of regulations to consider when it comes to taxes in this business. Therefore, it’s important that you are aware of these rules right from the beginning. For example, it’s helpful to check wether the standard tax rates apply to you, or you fall under the Kleinunternehmer regulation. This can have a huge impact on your finances.
In case of doubt, you should consult a tax advisor to avoid paying too much or too little taxes in the end. In general, it’s important to be informed and to have a good overview of your taxes from the very beginning. With the free app from Accountable, you can take care of your taxes fright from the start!