Introduction
Non-U.S. residents are thriving on Shopify especially with dropshipping, digital goods, and branded e-commerce. But in 2025, U.S. tax enforcement is stronger than ever. If you sell to U.S. customers, your financial planning must be IRS-ready or you risk double taxation, withholding issues, or frozen payouts.
This blog outlines a smart tax-compliant roadmap for nonresident Shopify sellers.
IRS Tax Rules for Non-US Residents Selling on Shopify
- IRC § 871(b): Nonresidents are taxed only on U.S.-source income that is effectively connected with a U.S. trade or business
- IRC § 1441: U.S. payers must withhold 30% tax on certain U.S.-source income paid to foreign persons unless treaty reduces rate
- IRC § 861: Determines what qualifies as U.S.-source income
- IRC § 6001: Nonresidents with U.S. income must maintain records
- U.S. sales through a dependent agent, U.S. warehouse, or LLC can create U.S. tax nexus
Required Forms for Shopify Sellers Abroad
- Form W-8BEN or W-8BEN-E: Certify foreign status and claim treaty benefits
- Form 1040-NR: Required if you have effectively connected U.S. income
- Form 5472: If a U.S. LLC has a nonresident owner
- Form 1120: If operating via a C Corporation in the U.S.
- Form 1042-S: Issued by Shopify Payments if withholding applies
Example: Nonresident Seller Facing IRS & State Issues
Seller: Ana, based in Portugal, runs a Shopify store with a U.S. dropshipping supplier and receives payments via Shopify Payments.
- Annual U.S. Revenue: $110,000
- Uses a U.S. LLC (single-member disregarded)
- Did not file Form 5472 or 1120
- Outcome: LLC flagged by IRS; Ana received IRS notices and was hit with a $25,000 penalty for late Form 5472
Step-by-Step Financial Planning for 2025
Determine U.S. Source Income
- Use IRC § 861 to identify if your revenue is considered U.S.-source
- Common triggers: U.S. customers, U.S. bank account, U.S. suppliers, or storage
Choose the Right Business Structure
- Foreign individual: Use W-8BEN to avoid 30% withholding
- U.S. LLC: File Form 5472 + 1120 (even with $0 income)
- C Corporation: Consider if selling at high volume in the U.S.
File Tax Forms on Time
- Form 5472: Due April 15 with Form 1120
- Form 1040-NR: If required (i.e., you have ECI from U.S. sales)
Track U.S. Transactions Separately
- Use a U.S. business bank account (if needed)
- Maintain financials that separate U.S. vs. non-U.S. operations
Use Tax Treaties to Reduce Withholding
- Claim reduced rates via W-8BEN
- Portugal, India, UK, Canada, and many others have favorable treaties
Conclusion
If you’re a non-U.S. resident selling to U.S. customers via Shopify, you must treat financial planning seriously in 2025. One late filing or misstep can wipe out your profits. A tax-compliant setup ensures that your global success doesn’t become a U.S. tax nightmare.
Call to Action
Selling into the U.S. from abroad?
Schedule a meeting with Anshul Goyal, CPA EA FCA, a U.S.-licensed CPA, IRS-authorized Enrolled Agent, and global tax expert helping international Shopify sellers stay compliant.
- Schedule: https://calendly.com/anshulcpa/
- Email: anshul@kkca.io
- Website: www.kkca.io
About Our CPA
Anshul Goyal, CPA EA FCA, has guided 2,000+ global sellers through U.S. tax laws and entity structuring. He’s saved clients over $200M and helped foreign founders safely expand their businesses in the U.S. with IRS-ready planning.
Disclaimer
This blog is for educational purposes only. It is not legal, tax, or accounting advice. Consult with a licensed CPA or tax attorney for professional assistance.
FAQs
1. Do non-U.S. residents have to pay U.S. tax if they sell on Shopify?
Yes, if the income is U.S.-sourced and connected with a U.S. trade or business.
2. What is Form 5472 and who must file it?
Foreign-owned U.S. single-member LLCs must file Form 5472 with Form 1120 even with zero income.
3. How can I avoid the 30% withholding tax?
Submit Form W-8BEN and claim tax treaty benefits if available.
4. Can I sell on Shopify without a U.S. entity?
Yes, but depending on setup, you may still trigger U.S. tax nexus or reporting obligations.
5. What happens if I don’t file Form 5472?
A $25,000 penalty per year, per entity plus interest and enforcement actions.