Amazon KDP provides authors, publishers and online entrepreneurs with an easy way to self-publish books and distribute them through Amazon.

Both eBooks and printed books can be offered through the platform. Particularly in the case of paperbacks and hardcovers, this quickly raises the question:

Does the publisher sell the books directly and therefore engage in retail trade – or does the business model work differently?

For the correct tax classification in Spain, it is worth taking a closer look.

What is Amazon KDP?

KDP stands for Kindle Direct Publishing and is Amazon's self-publishing platform.

KDP allows various book formats to be published, including:

• Kindle eBooks
• paperbacks
• hardcovers

While an eBook is provided exclusively in digital format, paperbacks and hardcovers are physically produced.

The key feature is that printed books do not have to be produced in advance or kept in stock. Amazon itself explains that KDP prints books on demand. The printing costs are subsequently taken into account when calculating the royalties.

For printed books, KDP therefore also incorporates elements of the Print-on-Demand model.

eBook or printed book – does it make a difference for tax purposes?

At first glance, one might assume:

eBook = digital activity, printed book = sale of goods.

However, the distinction is not quite that simple.

For example, an author may publish the same work as a Kindle eBook, paperback and hardcover. For tax purposes, the assessment should therefore not be based solely on whether the customer ultimately receives a digital file or a physical book.

Instead, the decisive factor is how the KDP business model is structured contractually and what role the publisher and Amazon each assume.

How does the Amazon KDP business model work?

The publisher makes the book available to Amazon and grants Amazon the rights required for its distribution.

The KDP Agreement expressly provides for the rights required for the on-demand printing and distribution of books. These include, among other things, the reproduction, marketing, distribution, sale and licensing of books made available through KDP.

Amazon also performs key functions in relation to sales to customers. Under the KDP terms, Amazon may determine the retail price charged to the end customer and is responsible for payment processing, collection of payments, refunds and the associated customer service.

The publisher receives a royalty for the corresponding sales.

KDP therefore differs significantly from a traditional bookseller that purchases books, keeps them in stock and subsequently sells them directly to its own customers.

Does the publisher sell the books directly?

This is precisely where an important distinction must be made.

The mere fact that a paperback or hardcover bearing the publisher's name is sold through Amazon does not automatically mean that the publisher itself is engaged in traditional book retailing.

Rather, the KDP contractual terms distinguish between book sales made by Amazon to customers and the resulting payments made by Amazon to the publisher. Under the agreement, Amazon is responsible for taxes relating to its respective book sales to customers, while the publisher is responsible for taxes arising from the payments it receives from Amazon.

This distinction is particularly important for the tax classification of the business model.

 

Self-employed – but also engaged in retail trade?

With KDP, two questions should also be considered separately:

Is there a self-employed economic activity?
and
What type of self-employed activity is being carried out?

Anyone who operates KDP on an ongoing basis as their own business model from Spain and generates income from it is, in principle, carrying out a self-employed economic activity.

However, this does not automatically mean that the activity should be classified as retail trade.

Particularly in the case of printed KDP books, the existence of a physical product alone should not lead to the conclusion that the activity constitutes traditional trade in goods. Instead, the actual contractual relationships and services between the publisher, Amazon and the end customer are decisive.

This distinction is relevant in Spain because traditional retail activities may involve additional tax and administrative considerations, such as the Recargo de Equivalencia (equivalence surcharge regime).

How does the publisher receive its income?

Amazon refers to the publisher's income as royalties. Different calculation models apply depending on the book format.

For certain EU publishers, Amazon also offers a self-billing procedure, under which Amazon issues invoices on behalf of the publisher. For accounting purposes in Spain, specific invoicing and documentation requirements must be observed.

More information: Self-Billing in Spain: Can the customer issue my invoices?

Conclusion: A printed book does not automatically mean retail trade

Amazon KDP clearly demonstrates why online business models should not be classified solely on the basis of the end product.

A publisher can offer the same work as an eBook, paperback or hardcover. For printed books, KDP additionally handles on-demand printing, while the publisher receives royalties for the corresponding sales.

The fact that the customer ultimately receives a physical book therefore does not automatically mean that the publisher itself is engaged in traditional book retailing.

For the correct tax classification in Spain, the decisive factors are the activity actually carried out by the publisher, the rights granted to Amazon and the contractual structure of the sale and remuneration.

Our law and tax firm will be pleased to assist you in analysing your specific situation, handling the necessary administrative procedures on your behalf and preparing and filing the relevant tax returns. If you are interested in our services or have specific questions on this subject, please feel free to contact us by email or telephone.

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Author:

Lisa Wörfel
Tax Advisor
info@sspartners.es
Tel: (+34) 951 12 13 06
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