Selling on Amazon or Shopify from Italy: The U.S. Tax Obligations You May Not Know About

It has never been easier for an Italian company to start selling in the United States. Amazon's Global Selling program, Shopify's international tools, and a range of other platforms have removed most of the practical barriers to entry. An Italian manufacturer or brand can set up a Seller Central account, ship products to an Amazon fulfillment center, and start reaching American customers within weeks.

What these platforms do not make clear — and what many Italian entrepreneurs discover too late — is that selling into the U.S. market creates U.S. tax obligations. These obligations fall on the Italian entity itself, and they can be significant.

1. The Amazon FBA Problem

Fulfillment by Amazon (FBA) is the most popular fulfillment model for foreign sellers on Amazon.com. The seller ships inventory to Amazon, and Amazon stores, picks, packs, and ships the products to customers. It is operationally efficient — but it creates a tax problem that most Italian sellers do not anticipate.

When you use FBA, your inventory is physically stored in Amazon warehouses. Amazon decides which warehouses to use based on its own logistics optimization — which means your inventory may be distributed across 10, 15, or even 20+ states without your knowledge or control.

The presence of inventory in a state creates physical nexus in that state. Physical nexus means:

• the state can require you to register for sales tax
• the state can require you to collect sales tax on every sale to a customer in that state
• the state can require you to file sales tax returns (monthly, quarterly, or annually)
• in some states, physical nexus can also trigger income tax filing obligations

An Italian company using FBA may have sales tax nexus in 20 or more states simultaneously — and each state has its own rates, rules, exemptions, filing frequencies, and penalties for noncompliance.

2. The Shopify and Direct-to-Consumer Problem

An Italian company selling directly to U.S. customers through its own Shopify store (or any other e-commerce platform) faces a different but related set of issues.

Even without physical inventory in the U.S., the company is subject to economic nexus rules. Since the 2018 Wayfair decision, most states can require sales tax collection from any seller that exceeds certain thresholds — typically $100,000 in sales or 200 transactions in the state during a year. An Italian company with a successful Shopify store targeting U.S. customers can cross these thresholds in multiple states within the first year of operations.

Unlike Amazon, which in some states acts as a marketplace facilitator and collects sales tax on behalf of third-party sellers, a direct Shopify store places the full sales tax collection and remittance obligation on the seller. Shopify provides tools to calculate sales tax, but the legal responsibility to register, collect, file, and remit remains with the Italian company.

3. U.S. Income Tax Exposure

Beyond sales tax, there is the question of whether the Italian company's U.S. selling activity constitutes a U.S. trade or business — which would trigger a U.S. income tax filing obligation for the Italian entity itself.

The analysis depends on the nature and extent of the company's U.S. activities:

• FBA with inventory in the U.S.: Strong argument that the Italian company has a U.S. trade or business. The IRS may take the position that the company is engaged in selling activities in the U.S. through its inventory and Amazon's fulfillment operations.
• Drop-shipping from Italy: Weaker nexus argument if all fulfillment occurs outside the U.S., but economic nexus for income tax purposes is an evolving area.
• Third-party warehouse (non-Amazon): Similar to FBA — inventory in the U.S. creates a strong presumption of U.S. trade or business activity.

If the Italian company is deemed to have a U.S. trade or business, it must file Form 1120-F (U.S. Income Tax Return of a Foreign Corporation) and pay U.S. tax on income effectively connected with that business. The U.S.–Italy tax treaty may provide some protection — specifically, the treaty generally requires a "permanent establishment" before the U.S. can tax business profits — but the interaction between the treaty and modern e-commerce models is not always clear-cut.

4. Marketplace Facilitator Laws

One partial relief: most U.S. states have enacted marketplace facilitator laws that require platforms like Amazon, eBay, and Walmart Marketplace to collect and remit sales tax on behalf of third-party sellers. In states with these laws, Amazon handles the sales tax collection for sales made through its platform.

However, this does not fully solve the problem:

• not all states have marketplace facilitator laws
• these laws typically do not cover sales through your own Shopify store or website — only sales through the marketplace
• the seller may still need to register in each state, even if Amazon is collecting the tax
• income tax obligations are separate from sales tax and are not covered by marketplace facilitator laws

5. Why Selling Without a U.S. Entity Creates Problems

When an Italian company sells directly into the U.S. without a U.S. entity, several practical problems arise:

• Sales tax registration: Many states require a U.S. address or a registered agent to register for sales tax. Registering a foreign entity directly is possible but cumbersome.
• Banking: Without a U.S. entity, receiving U.S. dollar payments and managing U.S. financial obligations becomes more complex and expensive.
• Treaty application: If the Italian entity is filing U.S. tax returns directly, the treaty analysis (permanent establishment, effectively connected income) is more nuanced than for a properly structured subsidiary.
• Liability exposure: The Italian entity itself is directly exposed to U.S. tax liabilities, penalties, and potential audits — with no corporate veil between the Italian parent and the U.S. tax obligation.
• Italian tax complications: The Italian commercialista must deal with the interaction between U.S. tax obligations and Italian tax obligations on the same income — a coordination exercise that is significantly simpler when a U.S. subsidiary exists.

6. When to Set Up a U.S. Entity

Not every Italian company selling a few products on Amazon needs to immediately incorporate in the U.S. But the threshold for when a U.S. entity becomes advisable is lower than most Italian entrepreneurs expect. As a general guideline:

• Under $50,000 in annual U.S. sales: The compliance burden may not justify a U.S. entity, but sales tax obligations may still exist and should be monitored.
• $50,000–$250,000 in annual U.S. sales: The case for a U.S. entity is strong. Sales tax nexus likely exists in multiple states, and the income tax analysis becomes relevant.
• Over $250,000 in annual U.S. sales: A U.S. entity is strongly recommended. The compliance risk of operating without one is significant, and the cost of the entity is a fraction of the potential tax exposure.
• Using Amazon FBA at any volume: The physical nexus created by FBA makes a U.S. entity advisable at almost any sales level, because the sales tax compliance burden across multiple states is difficult to manage from Italy.

7. What to Do If You Are Already Selling

If your Italian company has been selling on Amazon or Shopify to U.S. customers without addressing U.S. tax obligations, you are not alone — this is one of the most common situations we encounter. The path forward typically involves:

• conducting a nexus study to determine which states have outstanding obligations
• evaluating voluntary disclosure agreements (VDAs) in states with significant exposure — these programs allow companies to come into compliance with reduced penalties and limited look-back periods
• deciding whether to establish a U.S. entity going forward
• setting up sales tax automation (Avalara, TaxJar) to manage ongoing compliance
• coordinating with the Italian commercialista to ensure proper treatment on the Italian side

Closing Observations

The ease of selling into the U.S. market through Amazon and Shopify has created a situation where thousands of Italian companies have U.S. tax obligations they may not be aware of. The platforms make selling easy — but they do not make compliance easy, and they do not absorb the seller's tax responsibilities.

The good news is that this is a solvable problem. With proper structuring, the right automation tools, and coordination between U.S. and Italian tax advisors, Italian companies can sell into the U.S. market profitably and compliantly. The key is to address the tax picture before it becomes an enforcement issue — not after.

This article is for general informational purposes and does not constitute tax or legal advice. Specific situations should be evaluated on a case-by-case basis.