Part 8: International E-Commerce Sellers Selling Into the US

The United States is one of the largest e-commerce market in the world. For sellers based in the UK, Europe, Canada, Australia, and across Asia, it represents an opportunity that is increasingly accessible: an Amazon US account can be opened from abroad, a Shopify store can ship to American customers from anywhere, and a US LLC can be formed by a non-US person without ever setting foot in the country.

What is not accessible remotely is the compliance framework that comes with it. US tax law does not stop at the border. A UK seller shipping goods to American customers, a German brand running Amazon FBA in the US, a Canadian entrepreneur building a Shopify store selling to the American market: all of these sellers have US tax obligations that most advisors in their home countries are not equipped to explain, and that most US-focused guides do not address with the depth the subject deserves.

This part covers the full picture for non-US sellers operating in the American market: whether you need a US entity, how FBA creates Effectively Connected Income, the filing obligations that carry the most serious penalties for non-compliance, how to obtain the tax identification numbers you need, how to open US banking from abroad, how your home country taxes your US income, and the specific issues that arise for UK, EU, and Canadian sellers in particular.

The Unique Position of Non-US Sellers: US Tax Obligations Without a US Address

The United States taxes economic activity, not just presence. You do not need to live in the US, be a US citizen, or have a US address to have US tax obligations. If you are generating income from US sources, or conducting business activity that the US tax system treats as connected to US trade or business, you have obligations under US law regardless of where you are sitting when you make the sale.

For most non-US e-commerce sellers, the relevant category of US-source income is income that is Effectively Connected with the conduct of a trade or business in the United States, known as ECI. Understanding what creates ECI, and what obligations flow from it, is the foundation of understanding your US tax position as a non-US seller.

A foreign person or entity that is not engaged in a US trade or business is generally subject to US tax only on certain categories of US-source passive income, taxed through withholding at a flat 30% rate. A foreign person or entity that is engaged in a US trade or business is subject to US income tax on ECI at the same graduated rates that apply to US taxpayers, and is required to file US tax returns. The distinction is therefore significant: for e-commerce sellers, the activity that most consistently creates US trade or business status is using Amazon FBA.

Do you need a US Entity to sell on Amazon?

You do not legally need a US entity to sell on Amazon.com. Amazon allows non-US individuals and foreign companies to register as third-party sellers and use FBA. Many non-US sellers operate through their home country's entity structure: a UK limited company, a German GmbH, a Canadian corporation, or similar.

However, operating without a US entity while using FBA creates a set of tax and compliance complications that a US entity structure typically resolves more cleanly. A foreign individual selling through FBA without any US entity is personally engaged in a US trade or business. Their ECI is reported on Form 1040-NR, the US Non-Resident Alien Income Tax Return, filed annually. A foreign company selling through FBA may be subject to US corporate income tax on its ECI, filing Form 1120-F.

A US LLC formed by the non-US seller creates a cleaner structure. The LLC conducts the Amazon business, holds the EIN, files US tax returns, holds the Amazon seller account, and opens the US bank account. The non-US individual or company owns the LLC and receives distributions, with the tax treatment governed by the interaction between the LLC's tax classification, the owner's tax residency, and any applicable tax treaty. This is the structure most professional advisors recommend for serious non-US e-commerce operators precisely because it creates clarity and separates the US business activity into a defined legal entity.

How Amazon FBA could create Effectively Connected Income for Foreign Sellers

The ECI analysis for FBA sellers turns on a specific question: does storing inventory in Amazon's US fulfilment network constitute engaging in a trade or business in the United States?

The IRS's position, and the position taken by most tax practitioners, is that it does, however this may not be formally settled by the IRS. Amazon's fulfilment activities, including storing, picking, packing, and shipping inventory owned by the seller, are generally treated as going beyond merely ministerial services and as constituting the conduct of trade or business in the US for the seller's account. This means that a UK seller with inventory in Amazon's US warehouses is generally treated as engaged in a US trade or business, the income is ECI, and a US tax return is required.

The tax treaty position varies significantly by country. The US has tax treaties with approximately 65 countries. The treaty between the US and the seller's home country may provide relief from US taxation on business income, but this relief is typically conditional on the seller not having a permanent establishment in the US. Whether an FBA fulfilment centre constitutes a permanent establishment for treaty purposes is actively debated and has not been definitively resolved for all treaty contexts. Sellers should not assume that treaty relief eliminates their US filing obligation even if it reduces their US tax liability.

Form 5472 and the Pro Forma 1120: The most commonly missed filing Obligation

• If there is one section of this guide that non-US sellers need to read twice, it is this one. The penalties for missing this filing are $25,000 per form per year, from the first failure, regardless of whether any tax is owed.

Form 5472 is an information return that discloses transactions between a US corporation or a foreign corporation engaged in a US trade or business and its related foreign parties. Since 2017, the filing obligation has been extended to single-member LLCs owned by a non-US person or entity and treated as disregarded entities for US tax purposes.

This means: if you are a non-US individual who has formed a US LLC to conduct your Amazon business, and that LLC is a single-member LLC treated as a disregarded entity, you are required to file Form 5472 for every year in which the LLC has reportable transactions with you as the foreign owner. Reportable transactions include any amounts paid by the LLC to the foreign owner, amounts paid by the foreign owner to the LLC, loans between the LLC and the foreign owner, and any other transfers of money or property. Every profit transfer from your US LLC back to your personal accounts in your home country is a reportable transaction.

The penalty for failing to file Form 5472 when required is $25,000 per form per year. This is not a graduated penalty. It is $25,000 from the first failure. Additional penalties of $25,000 per 30-day period apply if the failure continues after IRS notification. The penalties are assessed regardless of whether any tax is actually owed.

Form 5472 does not stand alone. A disregarded LLC owned by a non-US person that is required to file Form 5472 must also file a pro forma Form 1120, even though the LLC itself does not pay corporate income tax as a disregarded entity. The pro forma 1120 serves as the vehicle through which Form 5472 is attached and filed. Failure to file it triggers the same $25,000 penalty. The filing deadline for calendar-year LLCs is April 15, with a six-month extension available by filing Form 7004.

Non-US sellers who formed a US LLC, were told it was compliant, and have never heard of Form 5472 are in a situation that needs to be addressed promptly.

ITIN vs EIN: Which you need and how to get them without a Social Security Number

Employer Identification Number. Any US LLC or corporation needs an EIN. It is required to open a US business bank account, file business tax returns, register on Amazon Seller Central in a business capacity, and complete Form W-9 when US counterparties request it. For non-US individuals without a Social Security Number, the EIN application cannot normally be completed through the IRS's online tool. The application must be made by phone using the IRS's international line at +1-267-941-1099. The application can also be done by fax. The caller works through Form SS-4 verbally with an IRS agent who issues the EIN at the end of a successful call. International callers should be prepared for significant hold times. Some non-US sellers use US-based formation agents who can call the IRS domestic line on behalf of the entity, which typically results in faster service.

Individual Taxpayer Identification Number. The ITIN is issued by the IRS to individuals who need a US taxpayer identification number but are not eligible for a Social Security Number. Non-US individuals required to file a US tax return, including Form 1040-NR or a pro forma 1120, and who do not have a Social Security Number, generally need an ITIN. The application is made on Form W-7, submitted to the IRS along with certified identity documents. The application process can be initiated through an IRS-authorized Certifying Acceptance Agent, which avoids sending original identity documents to the IRS.

US Banking for Non-US Sellers: Options, Requirements, and Workarounds

Opening a US business bank account is one of the most practically challenging aspects of setting up a US e-commerce operation for a non-US seller. US banks are subject to strict Bank Secrecy Act and anti-money-laundering requirements that make them cautious about opening accounts for foreign-owned entities, particularly for applicants who cannot appear in person at a US branch.

Appearing in person at a US bank branch with LLC formation documents, the EIN confirmation letter, and identity documents remains the most reliable method for sellers who can make a trip to the United States.

For sellers who cannot make an in-person trip, Mercury Bank and Relay Financial are online-first US business banks that have been specifically designed to be accessible to non-US resident founders. Both have opened accounts for non-US owned US LLCs with processes that can be completed entirely online, though account approval is discretionary and not guaranteed.

Wise Business and Payoneer offer US dollar accounts with US routing and account numbers that can receive ACH transfers, including Amazon payouts. These are not technically US bank accounts held at a federally insured US bank, but they function similarly for receiving marketplace payouts and making business payments, and are significantly easier to open for non-US sellers.

Amazon itself can pay sellers in their home currency through its currency conversion service, eliminating the immediate need for a US bank account to receive marketplace payouts. However, a US bank account remains valuable for paying US vendors, handling sales tax remittances, and maintaining the financial separation that proper entity operation requires.

VAT in your Home Country vs US Sales Tax: Managing both simultaneously

Non-US sellers entering the US market typically come from jurisdictions with their own consumption tax systems: VAT in the UK and EU, GST in Canada and Australia. The two systems are entirely separate. US sales tax and UK VAT are both consumption taxes on sales to end consumers, but they operate under completely different legal frameworks, administered by completely different authorities, with different rates, thresholds, filing frequencies, and taxability rules. Compliance with one does not contribute to compliance with the other.

For goods sold to US customers from US-based FBA stock, the place of supply is in the United States. UK VAT and EU VAT generally do not apply to these sales, as the supply occurs outside the relevant VAT jurisdiction. EU sellers also need to manage their One Stop Shop (OSS) obligations for cross-border EU supplies and their Import One Stop Shop (IOSS) obligations for goods imported into the EU, which are entirely separate from US sales tax.

Foreign VAT incurred on business expenses can in some cases be reclaimed through foreign VAT refund mechanisms. A UK business that incurs VAT on UK business expenses related to its US e-commerce activities may be able to reclaim that input VAT through normal UK VAT return procedures. VAT incurred in EU countries by non-EU businesses may be recoverable through the relevant foreign VAT refund scheme. Antravia Advisory's VAT.claims service specializes in identifying and recovering foreign VAT for international businesses, and non-US sellers with meaningful business expenses in their home country or in other VAT jurisdictions may be leaving recoverable VAT on the table.

How your home Country Taxes your US E-Commerce Income

Most countries tax their residents on worldwide income, meaning that income generated from a US e-commerce business is in principle taxable in your home country regardless of where it is earned. The mechanism for avoiding double taxation on the same income is typically either a tax treaty provision or a unilateral foreign tax credit.

UK tax residents are taxed in the UK on worldwide income. US income tax paid on the same income is generally creditable against UK tax liability under the UK-US tax treaty or UK unilateral relief provisions. However, the specific treatment depends heavily on structure: a UK individual operating through a US LLC that is treated as a disregarded entity for US tax purposes but as a transparent partnership for UK tax purposes creates a particular set of interactions requiring careful analysis. UK sellers operating in the US are strongly advised to seek advice from a professional with expertise in both jurisdictions before establishing their structure.

EU member states each have their own tax systems and bilateral tax treaties with the United States. The analysis is country-specific, and EU sellers should seek advice from an advisor experienced in both their member state's tax rules and US tax obligations.

Canada taxes its residents on worldwide income. The Canada-US Tax Convention is one of the more comprehensive bilateral treaties and provides significant protections against double taxation. Canadian residents with US-source business income generally receive a foreign tax credit in Canada for US taxes paid. However, the treaty does not eliminate the US filing obligation for Canadian FBA sellers, and Canadian sellers operating through a Canadian corporation may face a US branch profits tax in addition to US income tax on ECI.

UK Sellers on Amazon US: Specific Issues and what the Treaty does and does not help with

The UK-US tax treaty provides that business profits of a UK resident are taxable in the US only if the UK resident has a permanent establishment in the US. The treaty excludes from permanent establishment status the use of facilities solely for the purpose of storage, display, or delivery of goods. Whether an Amazon FBA fulfilment centre qualifies for this exclusion is the central treaty question for UK FBA sellers.

Amazon's fulfilment activities go beyond pure storage: Amazon picks, packs, and ships goods, processes returns, and provides significant logistical services. The extent to which this broader activity takes the arrangement outside the storage exclusion and into permanent establishment territory has not been definitively resolved in the UK-US context. The practical position taken by most UK tax professionals is that reliance on treaty protection as the sole reason for not filing a US return is a risk position. Filing a protective Form 1040-NR or operating through a US LLC that files its own US return may be a more defensible approach.

Many UK sellers operate their US business through a US LLC owned by their UK company. The application of the UK-US treaty to this structure depends on how the LLC is classified for both US and UK tax purposes. HMRC's approach to LLC classification has been the subject of ongoing guidance, and the correct treatment of a UK company's share of LLC income requires specific advice rather than a general assumption.

EU Sellers on Amazon US: VAT OSS, DAC7, and US Income Tax Interaction

EU sellers operating on Amazon US face a compliance picture that sits across three distinct regulatory frameworks: EU VAT, EU tax reporting under DAC7, and US income tax. Each operates independently.

EU sellers making sales from US FBA stock to US customers are generally making supplies outside the scope of EU VAT. They do not charge EU VAT on US sales. However, their cross-border EU sales through Amazon's European marketplaces are subject to the One Stop Shop regime, and their imports of goods into the EU are subject to IOSS obligations. These EU regimes are entirely separate from US sales tax.

DAC7 is an EU directive requiring digital platform operators, including Amazon's European marketplaces, to collect information about sellers and report it to relevant EU tax authorities annually. Amazon's European platforms report EU-based sellers' transaction data to the tax authority of the seller's member state of residence. EU sellers managing both EU marketplace activity and US marketplace activity should be aware that their EU platform activity is being reported to their home country tax authority, which may prompt scrutiny of the consistency of their overall tax position.

The US ECI and filing obligation analysis applies to EU sellers in the same way it applies to UK and other non-US sellers. Not all EU member states have comprehensive tax treaties with the US that address the FBA permanent establishment question, and sellers from member states with limited or no treaty coverage face a more straightforward US tax filing obligation.

Canadian Sellers on Amazon US: The Canada-US Tax Treaty and its Practical Implications

The Canada-US Tax Convention is comprehensive and provides significant protections, but it does not eliminate US compliance obligations for Canadian FBA sellers. The treaty contains a permanent establishment article that excludes from permanent establishment status the use of facilities solely for the storage or delivery of goods. The same analysis regarding whether FBA activity goes beyond pure storage applies equally to Canadian sellers, and the exclusion is not unconditional.

Canadian sellers operating through a Canadian corporation may face a US branch profits tax in addition to any US income tax on ECI. The Canada-US treaty reduces the branch profits tax rate for Canadian corporations but does not eliminate it.

Canadian sellers should also be aware that Canada's controlled foreign affiliate rules may apply to their US LLC if the LLC is treated as a corporation for Canadian tax purposes, creating a hybrid mismatch situation that requires specific advice from a professional experienced in Canada-US cross-border transactions.

How Antravia Advisory Supports International E-Commerce Sellers

The compliance picture for a non-US seller entering the US market sits at the intersection of US tax law, home country tax law, applicable tax treaties, US entity formation, US banking access, and platform-specific marketplace rules. The advisors best positioned to help are those who understand both sides of the border, not just the US side in isolation.

Antravia Advisory works specifically with international sellers navigating the US market. Our services in this area include US entity formation and EIN registration for non-US founders; Form 5472 preparation and pro forma 1120 filing, including remediation for sellers who have missed prior year filings; US income tax return preparation for non-US individuals and foreign-owned entities with US-source income; sales tax nexus analysis and registration; US banking access guidance; and foreign VAT reclaim services through VAT.claims for sellers with recoverable VAT on business expenses incurred outside the US.

Sellers who establish the correct structure before or at the point of entry to the US market save significant remediation cost compared to those who have been operating for several years without addressing their US tax obligations. If you are a non-US seller currently operating, or planning to operate, in the US market and have not had a comprehensive review of your US tax position, that conversation is worth having before your next shipment reaches Amazon's US warehouses.

• Antravia Advisory provides US tax and compliance services for international e-commerce sellers, including entity formation, Form 5472 filing, US income tax returns, and sales tax compliance. Contact our team at antraviaadvisory.com.

Part 9: Sales Tax Automation and Tools continues next.

Also available - The Non-US Founder’s Complete Guide to Running a US Business

The Non-US Founder's Complete Guide to Running a US Business - Everything a non-US founder needs to know about setting up, operating, and scaling a US business, from choosing the right entity and opening a bank account, to tax compliance, paying yourself, hiring staff, and managing your home country obligations. Built for international entrepreneurs who want to get it right. Link

About Antravia Advisory

Antravia Advisory is a US-based tax and accounting advisory firm headquartered in Winter Park, Florida, operating nationally and internationally.

We advise international businesses entering the United States and complex US companies operating across multiple states, entities, and revenue structures. Our work spans advanced tax strategy, multi-state sales tax oversight, cross-border structuring, and high-level accounting architecture for e-commerce brands, subscription and SaaS businesses, platform-based models, and multi-entity groups.

We work with founders and leadership teams who require technical precision, structural clarity, and financial frameworks built for scale, capital events, and long-term resilience.

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