Cross-Border Ecommerce and the Commissionaire Trap: Are You Creating a Tax Presence in Australia Without Realising It?
As ecommerce operations become increasingly globalised, many businesses are turning to sophisticated logistics and payment structures to reduce friction, manage currency flows, and optimise processing costs. But for companies operating from low-tax jurisdictions like Hong Kong, these arrangements can carry unintended tax consequences in Australia, especially when dealing with warehousing and local payment agents.
The Scenario
Consider a Hong Kong-based company that owns an ecommerce website, manages its own marketing, and holds inventory. It ships products globally. Importantly, the business has:
- No Australian staff,
- No Australian office,
- A related-party warehouse in Australia that stores and dispatches products, and
- No sales or customer service functions conducted in Australia.
From a commercial perspective, this may look like a classic third-party logistics (3PL) arrangement. The warehouse merely stores and ships goods, title remains with the Hong Kong company, which also bears inventory risk.
Separately, the company is considering appointing a new Australian entity to collect payments from Australian customers via Shopify, not as a reseller, but under a Commissionaire agreement, where the Australian company acts as a collecting agent. The rationale? Payment processing costs are materially lower when using an Australian merchant facility.
What’s the Problem?
The ATO (and OECD guidance) make clear that certain structures, particularly where a related entity habitually exercises authority to conclude contracts or bind the offshore principal, can trigger a Dependent Agent Permanent Establishment (PE). Once a PE is formed, Australia may assert taxing rights over the offshore entity’s business profits attributable to that PE.
Two key risk vectors emerge:
- The Warehouse: Does Storage Trigger a PE?
Ordinarily, warehousing alone does not create a permanent establishment, provided the storage is preparatory or auxiliary in nature (as per Article 5(4) of the OECD Model Tax Convention).
But the issue becomes more complex when:
- The warehouse is a related party, and
- It performs more than mere storage (e.g., inventory management, fulfilment decision-making, or batch packaging).
If those functions stray into core business activities, a PE risk increases.
- The Commissionaire Model: A Stealth PE Risk?
The Commissionaire model was once viewed as a way to avoid creating a PE. But after BEPS Action 7 and corresponding domestic updates, the scope of dependent agency has widened.
If the Australian collecting entity:
- Is related to the offshore principal, and
- Habitually plays a decisive role in concluding sales (even if contracts are signed online offshore),
…then the risk of a Dependent Agent PE is real.
And if there is no arm’s length remuneration for that Australian company, or the local entity is undercapitalised, this opens additional exposure under transfer pricing rules.
What Should Businesses Do?
Any offshore ecommerce business using local warehousing or payment agents should seek tailored tax advice on:
- PE exposure under Australian domestic law and relevant treaties;
- The structure and content of any Commissionaire or distribution agreements;
- Transfer pricing compliance for intra-group fees and margins; and
- Potential obligations to register for GST, income tax, or PAYG.
Final Thoughts
Setting up a Commissionaire or warehousing arrangement in Australia isn’t necessarily fatal. But poor documentation, related-party assumptions, or functional overlap can be. For multinational ecommerce players, the line between logistics efficiency and tax presence is increasingly blurred.
Don’t assume that because you have no employees in Australia, you have no presence. You may find that your business is already permanently established, in the eyes of the Commissioner.