In a nutshell…
- The setup of Amazon.com is similar to the setup of Amazon. com. In addition, one must fill out a special tax form.
- In order to sell in the USA with FBA, goods must be exported from Germany and imported into the USA. Logistics service providers help with this.
- The American sales tax “Sales Tax” takes effect at the state level and, depending on the location of the FBA warehouse, must also be paid by merchants from Germany.
Amazon.com as a lucrative market
The American market is much larger than the German and European markets, so there are plenty of incentives for retailers in this country to take the plunge across the pond. Amazon’s FBA program offers enormous reach advantages and can also be used in the USA. However, there are some special features that need to be taken into account.
In this article, we would like to explain to you schematically which steps are to be taken into account when connecting Amazon.com, how you can implement your assortment management with an FBA warehouse in JTL Wawi and what you should pay attention to when paying taxes in the land of unlimited possibilities.
Our initial situation
We would like to sell our goods on Amazon.com. For logistics handling, we use Amazon’s FBA service and store the products in an Amazon warehouse in the USA. With the help of JTL Wawi we manage our assortment and order processing. We continue to assume that we are operating as a company registered in Germany.
It is supposed to be about a special case that we have an FBA warehouse in the USA and distribute our goods there. Warehouses in Canada or Mexico, for example, would also be conceivable, but they complicate matters because imports have to be made again at the border with the USA. So we deliberately keep it simple here and have our products housed in an FBA warehouse within the US.
Activate Amazon.com account and link it with JTL
The registration at Amazon.com is basically the same as the registration at the German marketplace. Under the following link you will get a small overview of the conditions and by clicking on “Start Selling” you can start the registration process: https://www.amazon.com/sell-products-online/b?ie=UTF8&node=12766669011. You can either sign in with your existing Amazon.de account or create a new account. Both are possible.
The login screen will guide you through the individual steps. You should have the following documents ready:
- Business name and address
- Contact information and phone number
- Credit card information and bank account data
- Tax information
You will also need to complete and provide a tax form for Amazon:
For integration with JTL, the Amazon Professional account should be of type “Seller-Central” or “Marketplace”. “Amazon Vendor Central accounts are not supported by JTL.
If you have set up your account, then the link with JTL is quite fast. In the online guide from JTL the connection via the interface JTL eazyAuction is described step by step: https:%C3%. Among other things, you have to activate the Marketplace Web Service (MWS). For Amazon.com, this can be done at the following link: https://sellercentral.amazon.com/gp/mws/index.html.
Import of goods to the USA and FBA warehouse
Since our inventory is located in Germany, we have to export our products from Germany and import them to the US. For this process, it is a good idea to hire a logistics service provider such as a customs broker or freight forwarder, as they usually have the necessary expertise. In any case, it is important to inform yourself thoroughly in advance about possible import taxes, customs duties and fees. The basic procedure of an import is:
- Create commercial invoice where we are registered as importer of the goods
- Bringing products to the port of export
- Clear products at customs for export
- Hand over products to the carrier
- Transport products to the port of destination
- Clear products at customs for import
- Transport products to the shipping center
Before we import our products, we should have registered with Amazon.com for “Shipping by Amazon”. On the following page you will find general information and you can start the activation process by clicking on “Get started”: https://services.amazon.com/fulfillment-by-amazon/benefits.htm.
By the way, for FBA we don’t need to set up a new warehouse in JTL Wawi. As soon as the Wawi reads in even a single FBA offer in a match, an FBA warehouse is automatically created. Then, for example, stock transfers can be triggered directly in the Wawi.
Online trade in the USA and the matter of sales tax
There is a double taxation agreement between Germany and the USA. This is to avoid double taxation in both countries. Specifically, this means that as a German company, you do not have to pay sales tax in the U.S. at the federal level.
However, there are numerous special regulations at the state level and, in particular, the U.S. sales tax (equivalent to the German turnover tax) is within the jurisdiction of the states. For this reason, the double taxation treaty does not apply and a German company may be required to pay U.S. sales tax in different states.
The U.S. equivalent of the German sales tax is called “sales tax” for trade within a state and “use tax” for trade between states. Sales Tax and Use Tax usually have the same tax rate within a state. The sales tax is paid by the entrepreneur and is payable by the consumer. The situation is different with the use tax. It is to be paid by the buyer and very few end users comply with it. The result is an extensive enforcement deficit there.
From this enforcement deficit, the fiscal “nexus” provision was born. Here, if the entrepreneur has a sufficient presence in a state, interstate trade transactions are redefined as intrastate trade transactions and one must pay sales tax as a seller even when trading between states.
When a nexus takes effect is not uniform in this regard and is up to the power of a state. However, if we place our goods in an FBA warehouse, then the sufficient condition for nexus is usually met – only the state of Virginia is an exception here. The amount of sales tax to be withheld is then based on the tax rate in the respective state. In some states, the sales tax is not even levied at all, as in Delaware and New Hampshire.
More detailed information about registration, notification and collection requirements as well as the amount of the respective sales tax depending on the state can be obtained from the German-American Chamber of Commerce in New York. They can be found at https://www.gaccny.com/en/.
This article will give you an overview of the necessary steps if you plan to sell with FBA on Amazon.com. However, you should always contact the appropriate contact person, especially for import and export and tax issues. Errors in customs clearance or tax payment can be costly and subject to penalties. So inform yourself well in advance before you dare to take this step.