Ecommerce Sellers Guide: Income, Expenses & Tax Compliance

The global ecommerce market exceeded $6 trillion in 2024. Ecommerce sellers operate across Amazon, eBay, Etsy, Shopify, TikTok Shop, and dozens of regional marketplaces — selling physical goods, private label products, handmade items, and dropshipped inventory globally. This guide breaks down what ecommerce sellers actually keep after the full marketplace fee stack, fulfilment costs, advertising, and tax — and why most sellers dramatically underestimate what they owe.

Quick Answer: What Do Ecommerce Sellers Actually Keep?

Ecommerce sellers typically keep 20–40% of gross sales after product costs, marketplace fees, fulfilment, advertising, and tax — significantly lower margins than service-based platform earners.

• North America: An Amazon FBA seller with $200,000 gross sales keeps approximately $40,000–$70,000 after COGS, Amazon fees, advertising, and tax.
• Europe: A UK Etsy seller with £100,000 gross keeps approximately £28,000–£42,000 after materials, fees, and tax.
• Asia Pacific: An Australian Shopify seller with AUD $150,000 gross keeps approximately AUD $35,000–$55,000.

Margins vary dramatically by category, platform, and advertising efficiency — and are consistently overstated when COGS and the full fee stack are not accurately tracked.

Income Breakdown: The Real Fee Stack

Marketplace fee structures — the full cost (2025):

Amazon: Referral fee 8–15% by category plus FBA fulfilment fee $3.22–$5.40 per unit plus monthly storage plus advertising (typically 15–25% of revenue for PPC). Effective total platform cost on a $30 product: 42–58% of sale price before COGS.

Etsy: $0.20 listing plus 6.5% transaction plus 3% plus $0.25 processing plus optional 12–15% Offsite Ads (mandatory above $10,000 lifetime sales).

eBay: Final value fee 10–15.55% by category plus payment processing.

TikTok Shop: 5–8% commission plus processing.

Shopify: 0% on Shopify Payments plus $39–$399 per month platform fee.

The gross versus net reporting error: Most ecommerce sellers report bank deposits as income — the net payout after Amazon or Etsy deducted all fees. The correct approach: report gross sales revenue, then deduct each fee category as a business expense. The taxable profit is identical but the gross figure accurately reflects business size for lender applications and visa documentation. The Etsy platform transparency breakdown covers how Etsy reports to tax authorities globally.

Cost of Goods Sold (COGS) is the primary profit driver. COGS includes product purchase or manufacturing cost, inbound shipping to fulfilment centres, import duties, packaging materials, and product photography. COGS is calculated as opening inventory plus purchases during year minus closing inventory. Accurately tracking COGS is the single most impactful financial task for any physical product seller.

Returns and dead inventory: Ecommerce return rates average 15–30% in many categories. Returned goods that cannot be resold should be written down to nil and the write-off claimed. Amazon FBA reimbursements for lost or damaged inventory are taxable income in the year received — not a COGS credit. The record-keeping guide covers inventory documentation requirements across jurisdictions.

Deductible Expenses: What Ecommerce Sellers Can Claim

Full deductible expense categories:

• Cost of Goods Sold — product purchase or manufacturing cost, inbound shipping, import duties, packaging materials, product photography: COGS components that reduce gross profit before operating expenses are calculated
• Marketplace and platform fees — Amazon referral plus FBA plus storage, Etsy listing plus transaction plus processing plus Offsite Ads, eBay final value, TikTok Shop commission, Shopify monthly fee: all deductible operating expenses
• Advertising — Amazon PPC (Sponsored Products, Sponsored Brands, Display), Etsy Ads, Facebook and Instagram ads, Google Shopping, TikTok ads, influencer fees: fully deductible. Amazon PPC is typically 15–25% of gross revenue.
• Fulfilment and shipping — 3PL costs, outbound shipping on non-FBA orders, return shipping, packaging supplies: deductible as fulfilment expenses
• Software and tools — inventory management (Linnworks, Extensiv), repricing tools (Jungle Scout, Helium 10), analytics (Sellerboard), accounting integrations (A2X for Amazon, Link My Books for Etsy): deductible in the year of payment
• Returns, refunds, and write-offs — unrecovered processing fee on refunded orders, inventory written off as unsellable, FBA disposal fees: all deductible losses
• Home office or warehouse — dedicated workspace for order management, packing, or administration: US $5/sq ft simplified or actual costs. UK £6/week flat rate or apportioned actual costs.

Tax Obligations by Region

North America

United States: SE tax 15.3% on net profit. Sales tax: Amazon, Etsy, and eBay collect and remit via marketplace facilitator laws in all states. Shopify sellers must handle via TaxJar or Avalara above economic nexus thresholds ($100,000 or 200 transactions per state).

Canada: Self-employed. T2125. HST/GST registration mandatory above CAD $30,000 annual revenue.

Europe

United Kingdom: Self Assessment. Income tax 20/40/45% on profit bands. Class 4 NI 6% on profits £12,570–£50,270, 2% above. VAT registration mandatory above £90,000 taxable turnover. Post-Brexit EU sales: consignments below €150 to EU consumers require IOSS — Amazon handles IOSS for FBA sellers with EU inventory. Shopify sellers must register for IOSS independently. Consignments above €150 subject to customs duty and import VAT at border. DAC7: Amazon, Etsy, eBay report UK seller earnings to HMRC from January 2024.

EU (Germany, France, Netherlands): DAC7 applies across all 27 member states. IOSS for cross-border consumer sales below €150. Marketplace facilitator rules mean Amazon and Etsy collect and remit VAT on marketplace sales. Extended producer responsibility (EPR) obligations for packaging in Germany, France, and other EU markets.

Africa

Nigeria: Taxable under the Nigeria Tax Act 2025, in force 1 January 2026. The consolidated relief allowance was abolished: the first ₦800,000 of annual income is now taxed at 0%, and rent relief of the lower of ₦500,000 or 20% of annual rent paid is deductible. Import duties administered by Nigeria Customs Service. VAT at 7.5%, with the registration turnover threshold raised by the 2025 reform — check the current figure with the Nigeria Revenue Service (renamed from FIRS on 1 January 2026). Our Nigeria platform income tax guide covers this in full, and tracking income across several platforms covers sellers running local and international marketplaces at once.

Kenya: Taxable under Income Tax Act. Import duties via Kenya Revenue Authority.

Ghana: Taxable under Income Tax Act 2015.

Asia Pacific

Australia: Self-employed. GST registration above AUD $75,000. GST at 10% on domestic sales.

India: GST registration above ₹20 lakh. TCS (Tax Collected at Source) at 1% collected by marketplace operators — creates GST credit for sellers. Flipkart, Amazon India, Meesho sellers must be GST-registered.

Latin America

Brazil: MEI regime up to R$81,000 (simplified) or IRPF as autônomo above cap. ICMS (state VAT) and ISS (municipal service tax) apply.

Mexico: Autónomo. IVA (16%) on goods. CFDI digital receipts for all transactions.

What Tax Authorities Already Know About Your Ecommerce Income

Since January 2024, Amazon, Etsy, and eBay are legally required to report seller income in the EU and UK directly to national tax authorities under DAC7. In the US, 1099-K reporting covers platform payments above $5,000. In Australia, the ATO receives platform income data.

The figures being reported are gross sales — not net payouts after fees. A seller reporting net deposits has created a visible discrepancy with what the platform already submitted.

The COGS complication: Because ecommerce sellers have COGS as well as platform fees, the gap between gross sales reported by the platform and net bank deposits can be very large. Sellers need accurate COGS records to explain the difference — without them, the discrepancy looks like under-reporting. The platform fee comparison shows how Amazon, Etsy, and Shopify compare on effective rates.

Business Structure Options

Sole Proprietor / Self-Employed

Advantages: No registration cost. Tax on net profit only. All deductions available immediately. Simple bookkeeping.

Disadvantages: No legal separation — personal assets exposed to product liability claims. Full SE tax on all profit (US). No salary or dividend split (UK). Limited ability to bring in investment or partners.

Best for: North America gross sales below $100,000. Europe below £80,000. Single platform, low product liability risk.

LLC (US) / Ltd (UK) / Registered Business

Advantages: Liability protection — critical for physical goods sellers facing product liability risk. US S-Corp: SE tax only on salary above approximately $60,000 profit. UK Ltd: salary plus dividends reduces NI above £50,000. Company holds inventory, IP, and contracts separately from personal assets. Easier to operate multiple brands or platforms.

Disadvantages: Registration and annual compliance costs. More complex multi-platform multi-currency bookkeeping. US S-Corp: payroll required. UK Ltd: corporation tax filing plus annual accounts.

Best for: North America profit consistently above $60,000. Europe profit consistently above £50,000. Any seller with meaningful product liability exposure. Sellers operating multiple brands.

Filing

Filing deadlines, forms and methods differ by country, change from year to year, and depend on your own circumstances. We do not publish them here, because a date that is right for one country and one type of earner is wrong for another — and a reader who acts on the wrong one pays for it.

Use your tax authority's own filing service, or a qualified accountant or tax adviser in your country. They will tell you what applies to you.

What PlatformTaxHub does is the step before that: consolidating what you actually earned across every platform, separating gross from fees, and converting currencies — so the figure you take to your accountant or type into a filing service is one you can trust. It does not file anything on your behalf.

Platform fees change without notice. The fee figures in this article were checked in September 2026 and are used as worked examples, not as current rates. For what a platform charges today, see Amazon, TikTok, Shopify.

Tax rates and thresholds change every tax year. The Nigeria Tax Act 2025 figures here were checked in September 2026; for the current position see the Federal Inland Revenue Service. General information, not advice on your own return.