How Amazon achieves reasonable tax avoidance: tax tips from the United States to Germany

As the world’s largest cross-border e-commerce platform, Amazon has performed well in tax management and can reduce tax burdens while ensuring business activities. This article will explore Amazon’s legal tax avoidance strategies in the US and German markets.

In the United States, Amazon’s success is closely related to the shrewd operation of its tax team. Despite its size, the company has been able to “not pay a penny in federal income tax for two consecutive years” for many years, thanks in part to the unique U.S. tax system. Faced with the pressure of double taxation, Amazon cleverly takes advantage of the preferential tax treatment policy developed by high-tech technology. The company chooses to register its headquarters in Silicon Valley in order to enjoy extremely favorable tax policies. By continuously investing in high-tech projects, Amazon not only obtains tax subsidies, but also has the ability to use these subsidies as corporate benefits, thus attracting more technical talents.

At the same time, Amazon also adopted a stock option deduction policy. This strategy is particularly effective under American capitalism. In the context of local government investment promotion, governments at all levels are willing to introduce giant companies like Amazon because it can create a large number of local jobs. After Amazon successfully integrated U.S. tax policies, it actively sought overseas markets and took advantage of the tax advantages of different regions to reasonably avoid taxes, especially in the European market.

Turning to Germany, the tax pressure faced by Amazon sellers cannot be underestimated. Germany’s high tax rates trouble many cross-border e-commerce sellers. However, sellers must be clear that the consequences of tax evasion are extremely serious, including penalties such as suspension of account operating permissions, blocking of FBA inventory, and freezing of account funds. In this context, tax avoidance has become a core strategy for Amazon German sellers.

Sellers can achieve tax exemption by registering a VAT tax number and controlling the turnover below 90,000 yuan. At the same time, if the turnover is small and the tax threshold is not met, it is possible to enjoy the 7% low tax rate applicable to specific commodities. The key to reasonable tax avoidance is that the seller needs to maintain the status of a small, medium and micro enterprise and ensure that the turnover does not exceed the relevant limits.

In general, Amazon and its sellers have shown flexibility and foresight in tax management in different markets. Through legal tax strategies, it not only achieves the purpose of tax reduction, but also lays the foundation for its stable business operations.