How to declare the income received from Google Adsense and Amazon Affiliates

The generation of passive income is one of the main objectives of self-employed entrepreneurs and companies. This is achieved by generating revenue through means that do not require much work.

Companies like Amazon Affiliates (Amazon Affiliates) and Google Adsense come in since they can be part of your project to generate certain passive income. Other companies also offer this affiliate network, but we will deal with the two best known here.

One of the most frequent doubts that SEOs and businesses that start in this world have is usually the tax obligations involved in receiving income from the sale of advertising on their web pages (Google Adsense) and the affiliation of Amazon products ( Amazon Affiliates).

We have set to work and have created a complete guide for those taxpayers of the Provincial Treasury of Bizkaia who are dedicated to providing advertising services to companies such as Amazon Affiliate or Google Adsense and want to know how this income is taxed and the related taxation with Google Adsense and Amazon Affiliates. Keep reading to learn all the curiosities.

What is Amazon Associates

Amazon affiliates is a marketing service created by the Amazon company.

It is an affiliate program that allows web pages to include advertisements for products that are sold on Amazon. In exchange, the owner of the web takes commissions of between 3% and 10% for the sales generated through the ads posted on your website.

In other words, if the visitor to the website clicks on the advertisement of the Amazon product, the user is redirected to the Amazon website. If he ends up buying, the owner of the affiliated website receives a commission for the sale that has been generated…

This implies that Amazon Affiliates is the web client that issues the ads that promote their products.

For example, Amaia Mendizabal has set up a super cool website where she reviews products related to interior design and has put Amazon products on each of the pages she has created. Every time a user enters your website because it is very well positioned in Google and clicks on a link or product that takes them to the Amazon website, if the user ends up buying, Amaia will receive a commission for each sale made.

Do you know the ads for Amazon products that appear in different blogs or online magazines? These websites are probably part of the Amazon Affiliates project.

What is Google Adsense

Google Adsense works similar to Amazon Affiliates, but with Adsense, what you sell is advertising from other companies advertised through Google Ads.

It is a way to receive income by publishing advertisements on your website. Google will pay a commission to the creators of web pages for the ads they include in them and display by web users. You can include the ads in your blog, as long as they are created in another Google tool, which is Google Ads (formerly Google Adwords).

Do you know the product advertisements that appear in the margins of different blogs or online magazines? These websites are probably part of the Google Adsense project.

What is the difference between Google Adsense and Google Ads

There are numerous differences between Google Adsense and Google Ads. We mention the main ones:

1. Google Adsense could not exist without Google Ads as it is Google’s advertising platform. That is, Google Ads ads are advertised through Google Adsense.

2. A business or professional pays for Google Ads services. However, it is Google who pays companies or professionals to publish Google Ads ads on their websites through Google Adsense.

3. Google Ads is an expense for companies or professionals while Google Adsense is a source of income for other professionals or companies, for the latter, their client is Google.

4. Google AdSense is intended for web publishers or owners of these websites, blogs or forums who are looking for a way to generate income by posting ads through Google Adsense.

5. The objective of Google Ads is to advertise companies, professionals, services, products and others.

How to register with the Treasury and Social Security

You have found the idea of selling advertising through Google Adsense and selling products through Amazon Affiliates interesting and you want to comply with the tax obligations that this implies.

If you are going to dedicate yourself exclusively to the creation of web pages with the intention of generating income through platforms such as Amazon Affiliates or Google Adsense:

· You must register with the Treasury indicating the IAE heading that corresponds to you.

· You must register with Social Security indicating the CNAE that corresponds to said activity.

· Register as an Intracommunity Operator.

Steps to register as a Google Adsense and Amazon Affiliate entrepreneur

The first step to start the activity as a self-employed person is to register both with the Treasury through Form 036 and later with Social Security through its website or in person at the nearest offices.

To register your economic activity, you must know the IAE heading and the CNAE that correspond to you. Those that best fit the activity of advertising sales through Google Adsense and affiliation through Amazon Affiliates are:

· The IAE heading that corresponds to this activity is 844 – Advertising services.

· most suitable CNAE for the activity is 713 – Advertising.

How much will you pay as a self-employment fee to Social Security?

The first two years of activity you can enjoy a reduced fee as long as you meet the conditions of the flat rate for freelancers :

· You will pay €60 during the first year if you meet the requirements to access the flat rate .

· The following 6 months you will pay €143.07 and later this fee increases proportionally but you will still have bonuses until the end of the third year.

Tax on economic activities

As for the Tax on Economic Activities (IAE), you will not have to pay the Treasury, unless you exceed 2 million euros in billing.

How to bill companies for marketing services

Let’s imagine that you have watched Romuald Fons ‘s videos on SEO and you are already at the top with your web pages assembled, you have sent them to Google Adsense and they have been accepted, you have obtained the Amazon Affiliates API and soon you are going to start to receive income.

It is not really a fiscal obligation but rather an obligation of invoicing or communication of income. In other words, now your two main clients will be Amazon Affiliates and Google Adsense, and you would have to issue them an invoice for each of the income payments you receive.

The regulations oblige us to issue an invoice for the income we generate as a result of the economic activity we carry out and this activity is no exception.

Although Google and Amazon do not request the invoices, the Treasury will require them as proof of income, so we explain how to invoice these companies below.

As your clients (Amazon Affiliates or Google Adsense) are from other EU countries and not from Spain, the services you provide will be intra-community operations and to carry them out, you must be registered in the Registry of Intra-Community Operators, RO I.

To register you must indicate that you are requesting registration as an intra-community operator on Form 036. You cannot forget this point to start your activity on the right foot.

If you are not yet registered, we can do it for you in 12 hours, since we are a service point for entrepreneurs. Contact us!

How to make invoices for the provision of services

In order to record this income, you will have to create an invoice for each of the companies for each of the commission settlements that you receive.

The first thing you should take into account is the tax data of both companies, which are as follows:

Tax data Amazon Affiliates:

· Company name: Amazon Europe Core, Sarl.

· Address: 38 Avenue John F. Kennedy, L-1855, Luxembourg.

· NIF or tax identification number: LU26375245.

Google Adsense tax data:

· Company name: Google Ireland, Ltd.

· Tax address: Gordon House, Barrow Street – Dublin 4, Ireland.

· NIF or tax identification number: IE6388047V.

As you can see, their headquarters are from a country outside of Spain, but within the EU. Therefore, your services are intra-community operations (as long as you are registered in the ROI), which means that the invoice you issue will NOT include VAT or withholding, so you must indicate 0% . The tax base will coincide with the total amount of the invoice (the amount of the commissions that you receive for the advertising content attached to your website).

For example: Let’s suppose that in the month of November you have received income for €1,000 from Google Adsense, the invoice would be as you can see in this example (it is a screenshot taken from our online billing tool):

Remember that invoices between intra-community operators do not carry VAT.

Deductible expenses: What expenses can I deduct?

As a basic premise, keep in mind that you can deduct any expense that is directly related to the generation of income in your economic activity.

We give you some examples of deductible expenses in the advertising income activity of Google Adsense and Amazon Affiliates:

· Expense of the domain and hosting.

· Expense for hiring writers to create content.

· Mobile phone expense.

· Cost of fiber optic internet.

· Expense of tools like Sistrix, Ahrefs, SEMRush, etc. for competitor analysis, search for opportunity keywords, etc.

· SEO course expense.

· Expense from using task management tools like Asana, Trello, Slack, etc.

· Cost of using Google Workspace tools.

· And any other expenses related to your activity.

What tax obligations do I have to fulfill and what declarations do I have to present

All economic activities have fiscal obligations, taxes and informative declarations. The declarations that must be submitted for the advertising service provided to these large companies are as follows.

IRPF installment payments: Form 130

Every taxpayer who issues invoices and when more than 70% of the invoicing does not have IRPF withholding must present Form 130 to advance IRPF payments.

We cannot issue invoices with retention to these companies, since they are not taxpayers of the Spanish Tax Administrations. Therefore, we are obliged to submit Form 130 for installment payments of IRPF .

Do I have to declare VAT?: Model 303 and Model 390

The advertising activity is not an activity exempt from VAT, however, when our clients are from the EU and outside of Spain, the invoices that we issue will be exempt from VAT.

If we issue invoices without VAT, we will not collect any VAT to deliver to the Treasury, but since the activity is subject to VAT, therefore, we have the obligation to present the VAT Model 303 and therefore, the annual VAT Model 390 .

In this way, we can also deduct the VAT that we support in the expenses derived from the activity. If we do not deduct it, then, it will be as a higher expense in our activity and deductible in the Income Statement to calculate the net income of the activity.

Remember! In this VAT return you will have to fill in the boxes related to intra-community operations.

Declaration of intra-community operations: Model 349

As these are intra-community operations, you must present the summary declaration of intra-community operations, Form 349. If you do not exceed a turnover of 35,000 euros per year, you will only have to present it once a year.

We have prepared an article where you can see more information about the Informative Declaration of Intra-Community Transactions: “ Model 349 Bizkaia: what it is and how to fill it out ”.

Annual declaration of operations with third parties: Model 347

It is a communication so that the Treasury is aware of which suppliers or clients operations are carried out for an amount greater than €3,005.06 per year. Therefore, if you exceed this amount of income received from advertising in Adsense or Amazon Affiliates (individually), this model will also have to be presented.

Annual declaration Model 140 for Self-Employed of Bizkaia

The substitute for Model 347 in Bizkaia is Model 140, but instead of having to declare only transactions over €3,005.06, Model 140 Bizkaia declares all transactions carried out during the year.

Keep in mind that if you are registered in the BATUZ project , you will have to submit this statement quarterly, in addition to complying with the obligation to issue TicketBAI invoices .

Quarterly Declaration Model 240 for Companies of Bizkaia

If you are registered in the voluntary period of TicketBAI and BATUZ, remember that you have to comply with all the LROE (Registry Book of Economic Operations) and therefore you will have to present the informative declaration Model 240 for mercantile companies in Bizkaia every quarter.

In this declaration, as in Form 140, each and every one of the operations carried out is declared. But in this case, you have to declare the operations carried out during the quarter.

If you have any questions, we will be happy to help you, advise you on your activity and do your tax returns. Contact us!

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