---
title: How M2E Handles Taxes for Amazon Orders
description: "Learn how M2E Multichannel Connect handles tax calculation when creating Amazon orders in your e-commerce platform."
url: "https://docs.m2ecloud.com/docs/how-m2e-handles-taxes-for-amazon-orders/"
updated: "2026-11-05"
category: "Amazon / Amazon Orders & Shipping"
---

# How M2E Handles Taxes for Amazon Orders

M2E Multichannel Connect processes the tax data from each Amazon order based on your store’s tax setup and the tax settings you configure in M2E, then creates the order in your store. This helps you keep accurate tax records, including invoices, and show buyers clear tax information.

In this guide, you'll learn how M2E determines tax rates for Amazon orders and which tax-related settings to configure so that orders arrive in your store with the correct tax.

## Basic tax handling

When calculating taxes, M2E takes into account:

- Tax data received from the Amazon order (when available)
- Tax configurations set in your store 
- Non-standard VAT rate set in your [Amazon Selling Policy](https://docs.m2ecloud.com/docs/m2e-selling-policy-configurations/#provide-vat-information) (optional)

### Amazon tax settings

Amazon doesn’t include tax rates in the order data it sends via API, but it may send the tax amount. M2E determines the tax for an order as follows:

- **Tax rate:** M2E applies the standard rate for the buyer’s country. If you’ve set a non-standard VAT rate in your Selling Policy, M2E applies that rate instead.
- **Tax amount:** If Amazon sends a tax amount, M2E uses it and converts it to your store’s currency if needed. If Amazon doesn’t send one, M2E calculates the tax amount based on the tax rate.

> ℹ️ **If your products qualify for a reduced or zero VAT rate**, you need to set that rate in your Selling Policy. For the detailed steps, see [Custom VAT rates for Amazon UK and EU orders](https://docs.m2ecloud.com/docs/how-m2e-handles-taxes-for-amazon-orders/#custom-vat-rates-for-amazon-uk-and-eu-orders).

### Store tax settings

Each e-commerce platform connected via M2E has its own way of handling taxes.

Some platforms expect catalog prices to include taxes, while others calculate tax separately at checkout. Many platforms offer a toggle for tax-inclusive or exclusive pricing.

> ℹ️ If you're the one handling tax payments for your marketplace sales, the correct tax rate and amount will be shown in your store orders.
>
>
>
> However, **if the marketplace takes care of tax collection and remittance**(as is common with U.S. orders), you might not want that tax data included. With M2E Multichannel Connect, you can [adjust a setting](https://docs.m2ecloud.com/docs/how-m2e-handles-taxes-for-amazon-orders/#tax-exclusion-for-amazon-us-amp-ca-orders) to show only the tax information that matters to you.

### How M2E sends tax data

M2E recognizes your store’s tax settings and adjusts Amazon order data to match your store’s tax handling preferences.

**Example 1: Your store calculates tax**

- M2E sends the item **price excluding tax**.
- M2E sends the tax rate and tax amount separately, so your store can calculate the final price.

**Example 2: Your store uses tax-inclusive pricing**

- M2E sends the item **price including tax**.
- A tax breakdown is still provided when available to support accurate invoicing.

## Custom VAT rates for Amazon UK and EU orders

If you sell on Amazon's UK and European marketplaces, you may need to apply a reduced or zero VAT rate, depending on the product type or seller status. Amazon doesn’t send VAT rates in order data, so by default M2E applies the standard rate for the buyer’s country, which won’t fit those cases.

You can set the VAT rate yourself in your M2E Selling Policy:

1. Open your [Amazon Selling Policy](https://docs.m2ecloud.com/docs/m2e-selling-policy-configurations/#provide-vat-information) (*Settings > Policies*).
2. Find the **VAT rate** setting.
3. Enter your rate in the **B2C VAT, %** field for regular customer orders. For zero-rated products, enter 0.
4. If you sell to Business buyers, enter the rate for those orders in the **B2B VAT, %** field. This field appears only when the B2B option is enabled in the *Price* section.

[![M2E Cloud Amazon VAT Rate](https://docs.m2ecloud.com/wp-content/uploads/2025/02/M2E-Cloud-Amazon-VAT-Rate.webp)](https://docs.m2ecloud.com/wp-content/uploads/2025/02/M2E-Cloud-Amazon-VAT-Rate.webp)

M2E uses these rates when creating Amazon orders in your store:

| VAT, % field in your Selling Policy | Tax rate in your store order |
| --- | --- |
| Rate entered (for example, 5%) | 5% |
| 0 | 0% |
| Empty | Standard rate for the buyer’s country (for example, 20% in the UK) |

For the tax amount, M2E uses the amount Amazon includes in the order. If Amazon doesn’t send one, M2E calculates it using the tax rate above.

## Tax exclusion for Amazon US & CA orders

In the United States and Canada, **Amazon is responsible for collecting and remitting sales tax** for most states. This simplifies tax handling for you:

- Buyer pays the tax at checkout.
- Amazon handles the tax remittance directly to the authorities.
- You don’t need to calculate or collect tax for these orders.

Because Amazon handles sales tax, most US-based sellers prefer to receive these orders in their store without tax. **To exclude tax data for Amazon US orders in M2E:**

1. Navigate to *Settings > Orders > Tax Collection*.
2. Enable the **Exclude tax collected by US-based Marketplaces** option.

[![M2E Cloud Tax Exclusion for Amazon US Orders](https://docs.m2ecloud.com/wp-content/uploads/2025/05/M2E-Cloud-Tax-Exclusion-for-Amazon-US-Orders.webp)](https://docs.m2ecloud.com/wp-content/uploads/2025/05/M2E-Cloud-Tax-Exclusion-for-Amazon-US-Orders.webp)

With this option enabled, M2E creates US orders in your store without the sales tax that Amazon collected, so tax amounts don’t appear on store invoices where they aren’t required.

## Tax exclusion for Amazon FBA orders

If you use Amazon FBA (Fulfillment by Amazon), Amazon handles the fulfillment process, including shipping. In most cases, you don’t need FBA shipping costs and the related taxes imported to your store.

M2E allows you to exclude tax amounts (along with shipping costs) from Amazon FBA orders:

1. Navigate to *Settings > Orders.*
2. Open your Amazon account.
3. In the *Amazon FBA Orders* section, enable the **Exclude shipping cost details (inc. taxes) for Amazon FBA orders** option.

[![M2E Cloud Tax Exclusion for Amazon FBA Orders](https://docs.m2ecloud.com/wp-content/uploads/2025/05/M2E-Cloud-Tax-Exclusion-for-Amazon-FBA-Orders-1-1.webp)](https://docs.m2ecloud.com/wp-content/uploads/2025/05/M2E-Cloud-Tax-Exclusion-for-Amazon-FBA-Orders-1-1.webp)

## Need help?

If you have questions about how taxes are calculated in your Amazon orders, [contact the M2E support team](https://docs.m2ecloud.com/docs/how-to-contact-the-m2e-support-team-and-get-help/).

Not sure about your tax responsibilities? Your accountant or tax advisor can help you figure out what’s needed.