Amazon Affiliation: Earnings Tax Guide

Find out in this guide how you can earn with Amazon affiliate with a website. I’ll explain how to implement the affiliation, but more importantly, how to fiscally manage the earnings you’re going to generate.

Business Affiliations are unquestionably one of the primary sources of income for those who decide to monetize a website or blog.

The main advantage of business affiliations is that you don’t have to sell any products directly. All you have to do is promote a link related to the sale of a product.

Therefore, the affiliate’s profit depends on how many sales he manages to conclude through him the company that offers the products on the market.

Even Amazon has decided to launch a marketing initiative that allows those who own a website or a Blog to earn money. The money is made every time users buy from Amazon.co.uk through an advertising link on their site.

In this article, I will explain how to succeed in monetizing your site or blog through Amazon affiliation. You’ll find out the steps to take and the central answers I’ve offered over the years to readers who ask me about affiliations. But above all, I’ll explain how to manage the earnings properly you’ll get from a tax perspective.

How to earn with Amazon Affiliation

Through Amazon affiliation, you have the opportunity to earn a commission by promoting products that are not yours.

To monetize with Amazon affiliation, you don’t need to sell something on the marketplace. You’ll just need to promote an existing product.
Amazon offers compensation in the form of a commission to bloggers who lead other people to buy products on the site.

The affiliation process can be outlined as follows:

  1. You sign up for the affiliate program (membership is free) -> Amazon Affiliate Program;
  2. Place your affiliate links within your website or blog;
  3. When a user clicks on the product link on your blog (in an article, in a banner), they will be directed to the Amazon page where the product is sold;
  4. If the person buys the product, Amazon will pay you a percentage of the purchase in a commission.

This procedure applies to all marketing schemes based on business affiliations.

These procedures are automatic and straightforward. That’s why in recent years, so many people have decided to monetize their site with commercial affiliations.

Let’s now look at the main questions I get asked about the world of affiliations.

Why has affiliate marketing become so popular?

Affiliate marketing has become popular precisely because the affiliate enjoys maximum freedom in choosing the products or services to promote, the time to devote, and the strategies to follow.

Why should you choose Amazon affiliation?

Using Amazon affiliations is one of the best tools to earn money online. In my experience, there are many reasons why this is possible.

Amazon has products for every niche market

Amazon was born as an E-commerce for the online sale of books! Today it is one of the largest portals in the world that can sell all kinds of products.

Affiliation is all tools are free of charge

Through the portal that handles Amazon affiliation, you can generate links to any product.

You can create text links or clickable banners. This way, you can add links to your blog quickly and easily.

You can manage products about your market

Affiliate commissions vary between 1% and 10%, depending on the product you are promoting.

The percentage offered is not high, but keep in mind that it varies depending on the product’s price.

The strength of the Amazon brand

The Amazon brand is known by everyone, even those unfamiliar with online shopping. What does this mean?

That everyone trusts a brand like Amazon. This is why selling is more straightforward. Amazon for online sales is definitely among the first sites that come to everyone’s mind. Make use of this advantage.

Amazon is an E-commerce made to sell

A lot of people when they end up also buying other products than the one they started with. Up-sell and cross-sell mechanisms are exploited very well by Amazon.

The winning formula of affiliate marketing

Every Marketer who wants to make money knows very well that the equation to make the most of is as follows:

“Affiliate offers + paid advertising = profit.”

I know this may not seem very easy for you to understand at first glance, but it’s straightforward!

The first step is to sign up for the Amazon affiliate program. Having done that, you need to find products that are in line with your blog and promote them.

To identify the right affiliate campaign, it is essential to find a niche market where you can offer certain products in line with the target and compatible with the editorial line of your site.

To find a market niche, you can use one of the many tools provided by Google. Namely, GoogleKeywordsTool. This is an indispensable tool for analyzing how many and which searches are made by Google users when searching for products to buy.

However, all this alone is not enough. If you don’t have a huge audience, your chances of making money aren’t great.

That’s when you need to invest. You need to focus on paid advertising campaigns.

What are paid advertising campaigns?

Through Paid Advertising, you can acquire visitors in a targeted, measurable, and precise way.

They are part of paid advertising:

  • GoogleAdwords,
  • Google Shopping,
  • Facebook Ads,
  • Twitter Ads,
  • LinkedinAds,
  • Instagram Ads.

In practice, paid advertising is nothing more than the set of marketing strategies related to the paid promotion of products or services.

Through the proper use of these tools, you can bring paid visits to your site.

The importance of traffic for affiliate marketing

In the language of the web, having visitors, and therefore “traffic” is the basic element of any advertising campaign.

So, the formula I’ve given you above, if properly exploited, can bring significant results in terms of earnings.

Knowing how to act on the levers of this equation is not for everyone. However, it is necessary to understand how to handle and know the web, SEO, social media marketing.

Topics that require experience and in-depth technical knowledge.

That said, the advice I can give you is that earning money with affiliations is possible and potentially very lucrative.

However, it’s only worth joining in case you don’t have to do paid advertising. Affiliations are advantageous when you have a list of users on target with the products or services to be affiliated.

Administrative aspects of Amazon Affiliation: how to avoid being banned

In addition to the economic aspects, a good online entrepreneur must also take care of the administrative aspects. The goal is to make full use of the affiliate program and know its rules.

This is the first step to avoid being banned by Amazon.

So, if you want to know the program’s rules or have questions, you need to go to the Help page. It is well organized, and you will be able to access the information you need.

On the other hand, in the Operating Agreement section, you will find all the legal information and rules.

Want to know more about the commission rates you’ll take? Find everything on the page Advertising Commissions. In point 4, you will find the section dedicated to Italy.

What you must not forget is that Amazon is a solid brand. It’s like you’re working with a business partner. You have to trust him, but he has to trust you too!

Italian Tax Regime of Amazon Affiliations

Here we are at the fundamental point of this guide. I’m referring to the Italian tax regime related to Amazon affiliation.

From a tax point of view, there is no proper regulation of affiliate marketing. This means that its law has to go through similar and existing rules.

The affiliate marketing business has similar characteristics:

  • To the activity of procacciatore d’affari. So the typical activity of commercial agents (related to commissions);
  • To commercial activity related to advertising services.

For this reason, the starting point of any tax analysis is the business affiliation contract. Only in this way is it possible to understand the tax regime to be applied to these earnings.

As far as Amazon is concerned, its contract provides a typification of the affiliation activity of the entrepreneurial type. Let’s find out, therefore, what you have to do to be in order fiscally.

How to handle Amazon Affiliate earnings for tax purposes?

Let’s start with an assumption. The implementation of an affiliate marketing campaign always requires the opening of a VAT number.

The opening of a VAT number is necessary because the activity is exercised habitually and continuously. Forget about these two false myths of the web:

  • There are no minimum income limits with which you can operate without a VAT number;
  • There are no time limits for which it is possible to operate without a VAT number.

Affiliate campaigns have a constant duration in time. For this reason, the Inland Revenue does not allow exceptions on these aspects.

For this reason, the Agency necessarily requires the opening of a VAT number to declare the earnings from commercial affiliate programs.

Opening of VAT number

Opening a VAT number is the first tax obligation you need to take care of. Rest assured, you can very well delegate someone for you to fulfill all your tax obligations.

The VAT number is the instrument with which you must declare the earnings from affiliate marketing to the tax authorities.

Thanks to the VAT number, you will have to issue a document called an Invoice for each sale made.

Today you can issue Invoices in Electronic Format, which can make your invoicing easier.

Whoever deals with affiliations is, in effect, a customer intermediary; therefore, the ATECO code of reference will be 46.19.02 relative to business intermediaries of various kinds.

On the Internet, you will also come across those who recommend code 73.11.02. related to Marketing, but the latter should be used only if at the same time as the affiliations your business earns more money from direct marketing such as through communication agency services, door to door, or similar.

The next step to the VAT is the choice of the tax system.

Tax regimes for Amazon affiliation

For the choice of the tax regime, you have to be very careful.

Today there are two tax regimes you can use:

  • The Regime Forfettario. Scheme according to Law n° 190/14;
  • The ordinary regime, called “simplified accounting.”

Let’s see below some details about these two tax regimes.

Flat-rate scheme for Amazon affiliation

The flat rate scheme is a facilitated regime for smaller VAT numbers. This regime is suitable for those who plan to stay within the limit of € 65,000 of annual turnover. All with very convenient taxation. The 5% for the first five years and then move to 15%.

Further advantages are given by:

  • Exemption from Electronic Invoicing;
  • Exemption from VAT, IRAP, and withholding taxes;
  • Finally, the ISA exemption.

The disadvantage of this regime for those who operate with affiliations is the possibility of not deducting the costs analytically. In this case, precisely, the prices are “lump sum” linked as a percentage of turnover.

You will understand that for those who carry out advertising campaigns, not deducting the cost of advertising expenditure is disadvantageous.

However, keep in mind that the advantage of lower taxation compared to the ordinary regime is essential. For this reason, it is necessary to make an accurate evaluation.

Ordinary Regime and Amazon Affiliation

Alongside the flat-rate scheme, it is possible to opt for the ordinary taxation scheme. I refer to Simplified Accounting.

This is a much more complex tax system than the previous one. You must issue an electronic invoice, and you are subject to VAT and IRAP. In short, there are many obligations and IRPEF taxation that is not advantageous, especially for high volumes of income.

The only positive aspect of this scheme is the ability to deduct the costs of the business on an analytical basis. In this case, the cost of the advertising campaigns can be brought down on your income.

Your starting point should be to start your business in the country where you live. Then you can think about alternative solutions.

I recommend everyone to start in a flat rate scheme unless the costs of your business are high. But as mentioned, it is of paramount importance to simulate the income.

Conclusions

What is the solution to selling more with Amazon affiliations?

I decided to close by answering this question. It is one of the most frequent I receive on this topic.

If you want to make money from affiliations, you need to write reviews. Needless to say, they must be honest reviews.

To buy, people have to come to trust you. To do this, you have to build a strong brand day by day. Around this brand will slowly create a community of people.

These are the only users you need to target to get purchases. You don’t have to try to sell at all costs, and people understand that. However, you must try to be sincere and offer helpful advice. Only in this way will you be rewarded.

In short, if you create one of the many sites that writes reviews without having tried the products, you won’t get much success.

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