“I sell through Amazon.”

This is a statement we regularly hear in our advisory practice. However, on its own, it says surprisingly little about how an activity should be classified for tax purposes. Earning money through Amazon does not automatically mean that you are engaged in retail. What matters is how the specific business model actually works.

Amazon Is Not a Business Activity in Itself

Today, Amazon offers numerous ways to generate income. An “Amazon business” can therefore involve completely different types of activities.

The most common business models include:

• Amazon FBA (Fulfillment by Amazon): You sell your own goods through Amazon. Amazon mainly handles storage, shipping and parts of the order fulfilment process.
• Amazon FBM (Fulfillment by Merchant): You sell goods through Amazon but handle storage and shipping yourself.
• Amazon Merch on Demand / Print on Demand: You create designs, for example. Depending on the model, Amazon handles production and distribution and pays you the corresponding remuneration.
• Amazon KDP (Kindle Direct Publishing): You publish books or e-books through Amazon and receive remuneration or royalties.
• Amazon Affiliate / Associates: You recommend Amazon products and receive a commission when a purchase is made through your referral.
• Amazon Vendor: You sell your products to Amazon. Amazon then resells the goods in its own name.

These examples already demonstrate that although the platform is the same, the underlying business activity may be completely different.

When Is an Activity Considered Retail?

Put simply, retail generally means that a business sells goods in its own name to end consumers.

When assessing an Amazon business, one question is therefore particularly important:

Who actually sells to the end customer – you or Amazon?

It is also important to determine which service or activity you actually provide and how your contractual relationship with Amazon is structured.

FBA, Print on Demand and KDP – What Is the Difference?

With Amazon FBA, the business typically sells its own goods to end customers. Although Amazon handles storage, packaging and shipping, this does not automatically make Amazon the seller. In principle, this model is therefore more likely to constitute a trading or retail activity.

The situation may be different with Print on Demand. If, for example, the business creates designs while Amazon manufactures and distributes the products and pays the business remuneration in return, it is first necessary to determine which activity or service is actually being provided. Automatically classifying this model as retail would be an oversimplification.

The same applies to Amazon KDP. Anyone who publishes books or e-books and receives remuneration or royalties for doing so is not, for that reason alone, a retailer. Here too, the specific structure of the business model is decisive.

Why Is the Correct Classification Important in Spain?

The classification of the activity can have significant consequences for the tax and administrative requirements applicable in Spain.

Particularly in the retail sale of goods, additional rules may apply alongside the general tax obligations. These include, for example, the Recargo de Equivalencia (equivalence surcharge), which applies to certain retailers where the relevant requirements are met.

Furthermore, when trading in physical products, additional issues may become relevant, such as product liability, labelling requirements and other product-related obligations.

It is therefore particularly important to determine first whether the activity actually constitutes retail or whether the specific Amazon business model should be classified differently.

 

What Should You Check Before Registering?

Anyone intending to operate an Amazon business from Spain should clarify the following points in particular before registering the activity for tax purposes:

• What am I actually selling or what service am I actually providing?
• Who is my contractual partner?
• Who sells to the end customer?
• Who manufactures or supplies the goods?
• Do I receive sales revenue, a commission or royalties?

Conclusion: Not All Amazon Businesses Are the Same

Whether FBA, FBM, Print on Demand, KDP or affiliate marketing: it is not the platform that determines the tax classification, but the activity actually carried out.

In particular, the distinction between traditional trading in goods and other Amazon business models is important, as different tax, administrative and legal requirements may result from this classification.

Anyone operating an Amazon business from Spain or planning to start such an activity should therefore first determine which business model actually applies and which requirements arise from it.

Our firm will be pleased to assist you in analysing your specific situation, carrying out the necessary administrative procedures on your behalf and preparing and filing the corresponding tax returns. If you are interested in our services or have specific questions regarding this topic, please do not hesitate to contact us by email or telephone.

Author:

Lisa Wörfel
Tax Advisor
info@sspartners.es
Tel: (+34) 951 12 13 06
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