What actually catches Chinese exporters selling into the US and EU and how to get ahead of each one
Chinese exporters selling through Amazon may expect the marketplace to handle compliance on their behalf. However, there are four separate systems that each create a tax or compliance obligation, independently of each other and of the marketplace itself. They are physical nexus triggered by storing inventory in a US fulfilment centre, the European Union’s newly abolished duty free threshold, the fragile intermediary dependency built into Import One Stop Shop (IOSS) registration and the European Union’s live customs value matching system.
Why now: the gaps outside the marketplace are widening
$100,000 is the Washington State gross receipts threshold before Business & Occupation tax applies.
€3 is the flat duty charged per item type on every EU parcel since 1 July 2026.
5 to 10 days is the length of a Customs Data Hub hold once a declared value is flagged.
Each of these systems developed independently of the others and of Amazon’s own tax collection. A seller can be fully compliant on marketplace collected sales tax and Value Added Tax (VAT) yet still carry an unaddressed obligation in every one of the four areas below.
Four systems, one expansion
Fulfilment by Amazon (FBA) physical nexus creates a legal presence in the state where inventory is stored. Where it catches Chinese sellers: Amazon collects sales tax but not state specific taxes such as Washington’s Business & Occupation tax, which applies regardless.
The EU duty threshold previously exempted parcels under €150 from customs duty. Where it catches Chinese sellers: from 1 July 2026 it has been replaced with a flat €3 duty per item type, charged on every parcel regardless of value.
IOSS registration simplifies VAT collection for goods under €150. Where it catches Chinese sellers: it is only accessible through an EU established intermediary, since China has no mutual assistance agreement with the EU, and termination lapses the registration with no grace period.
The EU Customs Data Hub cross references declared values against market pricing. Where it catches Chinese sellers: it flags undervalued parcels automatically, triggering 5 to 10 day holds for physical inspection.
Amazon collects your sales tax. Not your state tax.
$100,000 is the gross receipts threshold before Washington’s Business & Occupation tax applies.
Storing goods in an Amazon fulfilment centre creates physical nexus, a legal presence in that state, regardless of who collects sales tax on the transaction. Washington State is a prime example: alongside sales tax, it imposes a Business & Occupation tax based on gross receipts once revenue crosses $100,000 and Amazon does not collect or remit this on a seller’s behalf at all.
Compliance data shows this gap disproportionately catches Chinese sellers, often as their first direct US tax obligation beyond federal requirements, precisely because “Amazon collects my sales tax” creates a false sense of full coverage. State auditors, including California’s Department of Tax and Fee Administration (CDTFA), are documented specifically targeting foreign owned entities running FBA operations during enforcement sweeps.
The EU closed the loophole your pricing model was built on
€3 is the flat duty per item type, charged on every parcel since 1 July 2026.
From 1 July 2026, the European Union abolished its €150 duty free threshold entirely, replacing it with a flat €3 duty charged per item type within every parcel. A pricing and fulfilment model built around duty free shipping under €150 now faces a direct cost increase on every single shipment. This is not a future risk but a charge already in effect.
You cannot register for IOSS yourself
0 days of grace period apply if your intermediary terminates the relationship.
China has no mutual assistance agreement with the EU, so Chinese sellers cannot register for IOSS directly and must appoint an EU established intermediary, who takes on joint and several liability for the VAT filed under your registration. If that intermediary terminates the relationship for any reason, your IOSS registration lapses immediately with no grace period and your parcels start attracting import VAT charges at the border from the very next shipment.
Your declared value is checked against a live database
5 to 10 days is the length of the hold once a declared value is flagged as a mismatch.
The EU’s Customs Data Hub now cross references every IOSS declared value against market pricing data automatically, flagging shipments that look undervalued for physical inspection. A declaration that once passed quietly can now trigger a 5 to 10 day hold the moment the system’s pricing model disagrees with it.
Before your next shipment
- Confirm whether your FBA storage locations include Washington State and check your Business & Occupation tax registration separately from sales tax.
- Confirm your IOSS registration sits with an intermediary in a stable, ongoing relationship, not a single point of failure you have not stress tested.
- Rework your landed cost model to include the flat €3 per item type duty on every EU parcel, not just VAT.
- Review declared values against current market pricing before shipping, since automated flags now trigger physical holds.
Tax Desk provides VAT registration, IOSS registration with fiscal representation and US Sales Tax registration and filing for Chinese exporters selling into the US and EU, managed as one connected compliance picture rather than four separate problems.
This report has been prepared by Tax Desk for general information purposes and does not constitute tax or legal advice. Market data and scheme details are drawn from publicly available third party research and should be independently verified before making registration, filing or compliance decisions.
