Introduction
Expanding your eCommerce store globally is a major milestone—but it comes with serious tax considerations. Whether you’re selling into Canada, the UK, Australia, or India, the U.S. tax code still applies. In 2025, U.S. sellers must report foreign sales, accounts, and entities, and comply with tax treaties, import/export rules, and foreign VAT obligations. This blog shows you the #1 tax move to protect your profits and gives a step-by-step plan for U.S. sellers expanding internationally.
IRS & International Tax Code Reference
For global eCommerce businesses, these IRS rules and international tax codes apply:
- IRC §61(a): Global income is taxable for U.S. persons, regardless of where it’s earned.
- IRC §6038 & §6046: Requires disclosure of foreign business ownership (Forms 5471/8865).
- IRC §6038D: Requires reporting of foreign financial assets (Form 8938).
- IRC §911: Foreign Earned Income Exclusion rules (if relocating).
- U.S. Tax Treaties: Mitigate double taxation when selling to or operating in treaty countries.
Key IRS Forms for Global Sellers
- Form 5471: Report ownership or control of a foreign corporation.
- Form 8865: For partnerships with foreign operations or partners.
- Form 8938: Report specified foreign financial assets.
- Schedule C (Form 1040): Still required for reporting global business income.
- Form 1116: Claim Foreign Tax Credit if paying tax abroad.
- Form 1040-NR: If working with non-resident partners or investors.
Real-Life Example: International Expansion Strategy
Case: David, U.S.-Based Amazon + Shopify Seller Expanding to Europe
- In 2024, David launched stores in Germany, France, and the UK.
- He registered for UK VAT and EU OSS (One-Stop-Shop).
- His foreign bank accounts crossed $50,000.
- His business owned a German GmbH subsidiary.
In 2025, David:
- Filed Form 5471 to report ownership in the GmbH
- Used Form 8938 to report foreign accounts
- Claimed Foreign Tax Credit via Form 1116
- Reported all foreign income on Schedule C
- Used accounting software to track multi-currency, multi-region transactions
He avoided IRS penalties, double taxation, and established audit-proof documentation.
Step-by-Step Tax Compliance for Global Sellers
- Track Global Income Separately:
- Segment U.S. and foreign sales in your accounting software.
- Register with Local Tax Authorities:
- VAT, GST, OSS, or import/export licenses may be required.
- Open a Foreign Entity if Needed:
- Consult on whether an overseas company structure benefits you.
- Comply with FBAR and FATCA Rules:
- If foreign financial assets exceed thresholds, file FBAR and Form 8938.
- Report Foreign Business Ownership:
- Use Form 5471 or Form 8865 based on structure.
- Claim Foreign Tax Credits:
- Avoid double taxation using Form 1116 for taxes paid abroad.
- Coordinate with Local Advisors:
- Work with accountants in the target countries for local filings.
Conclusion
Going global can scale your brand fast—but without tax planning, it can become a liability. U.S. sellers expanding overseas in 2025 need to handle foreign income, taxes, bank accounts, and entity structures with care. One missed form or late filing can trigger thousands in penalties. With the right compliance plan, global selling becomes both profitable and protected.
Call-to-Action and Disclaimer
Thinking of going global with your eCommerce brand?
Schedule a session with CPA Anshul Goyal to structure your international expansion and avoid tax traps.
Book a consultation here: https://calendly.com/anshulcpa/
Disclaimer: This blog is for informational purposes only and does not constitute legal or tax advice. Please consult a qualified CPA or cross-border tax specialist for your specific case.
Anshul Goyal, CPA EA FCA is licensed in the U.S., admitted to practice before the IRS, and specializes in global eCommerce taxation. He helps American online sellers and Indian founders in the U.S. expand safely into international markets with full tax compliance.
Top 5 FAQs
1. Do I need to report foreign income even if it’s taxed abroad?
Yes. All income is reportable under IRC §61(a). Use Form 1116 for a foreign tax credit.
2. What is the threshold for reporting foreign bank accounts?
If combined balances exceed $10,000, file FBAR (FinCEN Form 114). If over $50,000, file Form 8938.
3. Do I need a foreign company to sell internationally?
Not always. But in some cases, forming a local entity can reduce VAT and liability risks.
4. Can I claim expenses paid in foreign currencies?
Yes, but convert to USD using IRS-approved exchange rates.
5. What happens if I don’t file Form 5471 or 8938?
You may face penalties starting at $10,000 per form per year and risk IRS audits.
About Our CPA
Anshul Goyal, CPA EA FCA is a U.S.-licensed CPA, IRS Enrolled Agent, and Chartered Accountant from India. He has helped hundreds of eCommerce sellers with global expansion, cross-border tax filings, and international compliance strategies. With 15+ years of experience, Anshul has saved clients over $200M in taxes across 25+ countries.
Email: anshul@kkca.io
Schedule a call: https://calendly.com/anshulcpa/
Website: www.kkca.io