What jurisdiction to choose when registering a company for business on Amazon

At first glance, the topic of this article may seem irrelevant.

After all, if you are starting a business in the US market, it is logical to register a company within the US legal framework. But it’s not so one-sided and requires a deeper dive. Let’s take a closer look.

Amazon is not just about America

Start-up entrepreneurs with big ideas and burning eyes always associate Amazon only with the US market. On the one hand, this is the right strategy, if, of course, you have correctly selected the right product for the mentality and needs of the target audience.

It should not be forgotten that the EU market provides the platform with up to 80% of its “foreign turnover “*.

* The data are based on analysts’ hypotheses, as Amazon’s official statistics do not show revenues by country

In any case, targeting the EU market, as well as choosing the jurisdiction of individual European countries, can be a very profitable decision. An analysis of the following factors will help to determine this:

• demand for your chosen product in Europe and America;
• logistics. If you are focused on fulfilment (shipment to Amazon warehouses) and your target audience is Europeans, the conclusion is very logical;
• projected turnover;
• opportunities to legally reduce income tax and avoid double taxation;
• political and economic stability of the country.

Simply put, there is no single right solution, and each case should be considered in the context of prospects, current situation, initial investment amount, etc.

For example, we advise some businesses to register in Malta. Under certain circumstances, this allows you to reduce tax to 5% of profits while staying within the law. Moreover, it will not be an offshore company.

For example, we advise some businesses to register in Malta. Under certain circumstances, this allows you to reduce tax to 5% of profits while staying within the law. Moreover, it will not be an offshore company.

You can also consider the United Kingdom and other midshores as a country for registration – jurisdictions with flexible tax rates that adhere to international transparency standards. Advantages of midshores:

• stability in the banking sector;
• the ability to open a company account;
• relative ease of company and trade mark registration;
• simple taxation and reporting system (often in electronic form and only once a year);
• the ability to rent a physical office in the country of registration.

Important! If you are planning to run a Private Label business, please note that the internal Amazon Brand Registry programme offers this feature for a limited number of countries.

Registering a company in the US jurisdiction for business on Amazon

One of the most popular solutions. This is not surprising, given all the advantages:

• ease of doing business with the Amazon marketplace, from simplified verification to reduced operating costs;
• Increased level of trust among buyers of the US market;
• all the benefits of the developed US legal system;
• absence of bureaucracy and corruption when registering a company and a trade mark;
• ease of settlements with suppliers, customers and Amazon, thanks to local banking services, and much more.

However, the US has rather high taxes, which can be a significant disadvantage if you exceed your planned turnover and have a rapid development.

Is a CIS company suitable for Amazon?

Technically, you can register on the platform with such a company.

However, practice shows that companies from the CIS have no advantages and are even more likely to be a disadvantage for their owner.

Therefore, we always recommend choosing the EU or US jurisdiction.

If you have any questions related to the choice of jurisdiction, you can get a free consultation from our lawyer. To do so, please fill out the form below.