eBay San Jose Tax Sharing Deal Nears $50 Million In Public Rebates
eBay has received almost $50 million from its controversial tax sharing agreement with the City of San Jose, according to newly published public records that show another multimillion-dollar payout under the deal.
Under the deal inked in 2019, eBay agreed to conduct its business so taxable California sales on the platform would be reported with the company’s headquarters in San Jose as the place of sale, allowing the city to receive local sales tax revenue tied to those transactions.
In return, San Jose pays eBay 30% of the local sales tax revenue above an annual $5 million threshold, according to the agreement and city reporting.
San Jose’s FY 2024-2025 Tax Revenue Sharing Agreement Report says eBay has now received $49,452,613.74 in rebated sales and use tax revenue since the agreement was executed, including $3,385,760.05 during the fiscal year ending June 30, 2025.
The latest annual payout is down sharply from FY 2023-2024, when San Jose reported rebating $8,593,025.63 to eBay, but the deal still produced another multimillion-dollar payment.
The arrangement has been under scrutiny for years because it effectively treats taxable California sales on eBay as taking place in San Jose, even when the underlying transaction may involve buyers, sellers or fulfillment activity located elsewhere in the state.
That has been a major point of contention for cities that argue online sales tax revenue should be distributed based on where products are shipped or where the economic activity actually occurs, instead of being concentrated in cities that have struck revenue sharing deals with large retailers or marketplace facilitators.
The League of California Cities previously criticized these arrangements, and San Jose's eBay deal was specifically called out as an example of the broader sales tax allocation fight.
The scrutiny intensified in 2023 when Bloomberg Tax reported San Jose was fighting the California Department of Tax and Fee Administration over about $100 million in sales tax revenue received through the eBay arrangement since 2020, after the state reportedly questioned whether some of the revenue had been improperly allocated.
Liz Morton
A 2024 bill that would have phased out some tax sharing deals failed to pass, leaving eBay and other companies’ arrangements intact for now.
For sellers, the tax sharing dispute does not directly change what buyers pay or how eBay collects and remits marketplace facilitator taxes. But it adds another layer to a long-running concern: eBay benefits from sales tax in more than one way.
Since 2020, eBay has included sales tax in the total order amount used to calculate its simplified selling fees, meaning sellers pay fees on the tax collected from buyers even when eBay is remitting that tax as a marketplace facilitator.
At the same time, eBay has also been receiving millions from San Jose under an agreement tied to local tax revenue generated by California transactions on the platform.
San Jose and eBay have continued to publicly emphasize their close relationship, including a 2024 visit by Mayor Matt Mahan to eBay headquarters to meet with CEO Jamie Iannone and then-CFO Steve Priest about “shared priorities” and continued collaboration.
Liz Morton
Those shared priorities have now included nearly $50 million in public money rebated back to eBay. The deal is set to run through 2034, even as questions continue over how online sales tax revenue should be allocated in California.
