If you sell on eBay across borders, you've probably noticed VAT just appearing on some orders without you doing a thing, and not appearing on others. That's not a glitch. It's the deemed-supplier rules, and they decide whether eBay collects the VAT or you do.
Get this wrong and you either double-pay VAT or under-declare it. Both are expensive.
This guide explains how cross-border VAT actually works for eBay sellers: the £135 rule, the One Stop Shop (OSS), the Import One Stop Shop (IOSS), when eBay becomes the deemed supplier, and the bit most guides skip, the exact point where eBay's deemed-supplier role stops and the job lands back on you.
It's written for UK-based and overseas sellers shipping into the UK, into the EU, or both. Figures are for the 2025/26 tax year.
What does "deemed supplier" mean for eBay sellers?
A "deemed supplier" rule treats the marketplace, not you, as the seller for VAT. In certain cases eBay is deemed to have bought the goods from you and resold them to the buyer, so eBay charges, collects and pays the VAT to the tax authority. You're treated as making a separate, zero-rated supply to eBay.
This was introduced for goods imported into Great Britain from 1 January 2021, after the UK left the EU VAT system. Where the rule applies, eBay handles the VAT and you don't add it yourself. Where it doesn't, you're back to normal rules and the VAT is your responsibility.
The whole question, then, is which side of the line a given sale falls on. The £135 rule is the main switch.
What is the £135 rule and why does it matter?
The £135 rule is a value threshold for goods imported into the UK. Where goods sit outside the UK at the point of sale and the consignment is worth £135 or less, UK supply VAT is charged at the point of sale rather than as import VAT at the border.
Two details matter, and both come straight from HMRC's guidance.
First, the £135 limit applies to the value of the total consignment that's imported, not the separate value of individual items inside it. So three £60 items shipped together as one consignment total £180 and fall outside the rule, even though each item on its own is under £135.
Second, the £135 is the intrinsic value of the goods. You exclude transport and insurance costs (unless they're included in the price and not separately shown) and you exclude any other taxes the customs authority can identify.
Why it matters: at or below £135, VAT is dealt with at the point of sale, and on a marketplace sale that's eBay's job. Above £135, the goods follow normal import VAT and customs rules at the border, and that's your job.
When is eBay the deemed supplier for UK sales?
Short answer: eBay is the deemed supplier, and accounts for the UK VAT itself, in two main situations.
Situation one: low-value goods imported into the UK. Where goods are outside the UK at the point of sale, in a consignment of £135 or less, and sold to a UK customer through eBay, eBay is liable for the VAT. You're treated as making a zero-rated supply to eBay, and eBay charges the buyer VAT at checkout and pays it to HMRC.
Situation two: goods already in the UK, sold by an overseas seller. If the goods are located in the UK at the point of sale (for example in a UK fulfilment warehouse) and you're an overseas seller not established in the UK, eBay is liable for the VAT on those sales whatever the value. There's no £135 ceiling here. The reason it exists is that goods stored in the UK have already cleared import, so the £135 import test no longer applies.
In both cases you, the seller, still have your own obligations: you may need to be UK VAT-registered, and for imported stock you remain liable for any import VAT and Customs Duty when the goods first enter the UK (which, if you're VAT-registered, you can generally reclaim).
If you're a UK-established seller selling your own UK-located stock to UK buyers, eBay is not the deemed supplier. You account for VAT yourself in the normal way once you're over the VAT registration threshold, which is £90,000 of taxable turnover for 2025/26.
When does eBay's deemed-supplier role stop?
This is the part that trips sellers up. eBay's deemed-supplier role is not a blanket "marketplace always handles VAT" rule. It switches off in several specific cases, and when it does, the VAT is yours to handle.
1. Consignments over £135. Once the consignment value goes above £135, the deemed-supply rule for imports stops. Normal import VAT and customs rules apply at the border instead. eBay won't collect the supply VAT, and you (or your buyer, depending on incoterms) deal with import VAT, Customs Duty and clearance.
2. Business-to-business sales where the buyer gives a UK VAT number. If your UK business customer provides their VAT registration number, eBay does not charge and account for VAT on the sale. The business buyer accounts for it themselves under the reverse charge. In practice the invoice should carry a note such as "reverse charge: customer to account for VAT to HMRC".
3. You change the consignment value above £135 after sale. If the value is adjusted so the total goes over £135, you may become liable for import VAT and Customs Duty, and you'd need to adjust any VAT already accounted for at the point of sale.
4. UK-established sellers selling UK stock. The deemed-supplier rules target overseas sellers and imports. If you're established in the UK and selling your own UK-located goods to UK buyers, the deemed-supplier rule doesn't apply and you charge VAT yourself.
The practical takeaway: the moment a sale stops being "low-value imported goods" or "overseas seller with UK stock", assume the VAT is back on you and check the specific facts.
What are OSS and IOSS, and which do you need?
OSS and IOSS are EU schemes that let you report VAT on cross-border sales to EU consumers through a single registration, instead of registering in up to 27 member states. They became relevant to many sellers from 1 July 2021. They deal with sales into the EU, which is a separate question from the UK £135 rules above.
What is OSS (the One Stop Shop)?
The OSS Union scheme covers distance sales of goods to EU consumers. For a UK seller, the directly relevant version is the scheme for distance sales of goods from Northern Ireland to the EU, because Northern Ireland remains within the EU VAT area for goods.
The trigger is the EU-wide distance selling threshold of £8,818 (10,000 euros) a year. Once your distance sales to EU consumers go above that, you have to charge VAT at the rate of the destination country, and OSS lets you report and pay all of it through one return rather than registering in each country.
If you're shipping to EU consumers from Great Britain (not Northern Ireland), those are exports followed by an import into the EU, so the relevant scheme is usually IOSS, not OSS.
What is IOSS (the Import One Stop Shop)?
IOSS covers low-value goods, consignments of £135 (150 euros) or less, imported from outside the EU and Northern Ireland and sold to consumers in the EU or Northern Ireland. Register for IOSS and you get a unique 12-digit IOSS VAT identification number, which goes on the customs declaration for each consignment so import VAT isn't charged again at the EU border. You charge the destination country's VAT at the point of sale and report it through a single monthly IOSS return.
IOSS does not apply to consignments over £135, to excise goods such as alcohol and tobacco, or to sales to VAT-registered businesses.
A practical point for Great Britain sellers: a GB business generally can't register for IOSS directly and must appoint an EU-based intermediary to register and act on its behalf. Northern Ireland businesses can register through HMRC.
Where you sell through eBay rather than direct, eBay often operates its own IOSS registration and collects EU VAT at checkout on eligible low-value sales, using its own IOSS number on the consignment. That doesn't remove your need to understand the rules, your records, invoices and any direct (off-eBay) sales are still yours to get right. We cover the wider picture for marketplace traders on our page for eBay sellers.
Worked example: who pays the VAT?
Illustrative example. Mei runs an eBay shop from Shenzhen selling phone accessories. Her stock is held in China and shipped to buyers on each sale. She is registered for UK VAT. All figures are 2025/26 and the UK standard VAT rate is 20%.
Order A: a £40 phone case to a UK consumer. The goods are outside the UK at the point of sale and the consignment is £135 or less, so the deemed-supplier rule applies. eBay charges the buyer 20% UK VAT at checkout (£8 on a £40 net price, a £48 total) and pays it to HMRC. Mei makes a zero-rated supply to eBay and adds no VAT herself.
Order B: a £200 charging dock to a UK consumer. The consignment is over £135, so the deemed-supply import rule stops. Normal import VAT and customs rules apply at the border. eBay does not collect the supply VAT. Import VAT of £40 (20% of £200) is due on entry, and Mei, as the importer of record here, accounts for it and can reclaim it on her UK VAT return as input tax.
Order C: a £40 phone case to a UK VAT-registered business that gives its VAT number. Because the business buyer supplies a valid UK VAT number, eBay does not charge VAT. The buyer accounts for it under the reverse charge. The invoice carries the note "reverse charge: customer to account for VAT to HMRC".
Three near-identical-looking sales, three different VAT outcomes. That's the whole point of the rules, and why getting the bookkeeping treatment right per order matters.
Cross-border VAT decision table
| Scenario | Goods location at sale | Consignment value | Who accounts for the VAT |
|---|---|---|---|
| Overseas seller, sold via eBay to UK consumer | Outside the UK | £135 or less | eBay (deemed supplier) |
| Overseas seller, sold via eBay to UK consumer | Outside the UK | Over £135 | Seller / importer at the border |
| Overseas seller, sold via eBay to UK VAT-registered business (VAT number given) | Either | Any | Buyer, via reverse charge |
| Overseas seller, UK-stored stock, sold via eBay to UK consumer | In the UK | Any value | eBay (deemed supplier) |
| UK-established seller, UK stock, sold to UK consumer | In the UK | Any value | Seller (normal VAT rules) |
| NI seller, distance sale of goods to EU consumer above threshold | Northern Ireland | Above £8,818 / 10,000 euros a year | Seller, via OSS (destination VAT) |
| GB or NI seller, low-value goods imported to EU/NI consumer | Outside EU and NI | £135 / 150 euros or less | Seller via IOSS (or eBay's IOSS at checkout) |
Frequently asked questions
Does eBay collect VAT automatically on all my cross-border sales?
No. eBay collects and accounts for UK VAT where the deemed-supplier rules apply, mainly low-value imported consignments of £135 or less sold to UK consumers, and goods stored in the UK sold by an overseas seller. Outside those cases (consignments over £135, B2B sales where a VAT number is given, UK sellers selling UK stock), the VAT is your responsibility.
What is the £135 rule for eBay imports?
For goods outside the UK at the point of sale, a consignment worth £135 or less has UK supply VAT charged at the point of sale instead of import VAT at the border. On an eBay sale that means eBay charges the VAT. The £135 applies to the total consignment value, not each item, and is based on the goods' intrinsic value (excluding separately shown transport and insurance).
Do I need both OSS and IOSS?
It depends on what you sell and from where. IOSS is for low-value goods (£135 / 150 euros or less) imported and sold to EU or Northern Ireland consumers. OSS (the Union scheme) is for distance sales of goods from Northern Ireland to EU consumers once you pass the £8,818 (10,000 euros) threshold. Many sellers need one, some need both, and some need neither if eBay handles the EU VAT at checkout under its own IOSS registration.
When does eBay stop being the deemed supplier?
eBay's deemed-supplier role stops for consignments over £135 (normal import rules apply), for B2B sales where the buyer provides a valid UK VAT number (reverse charge), and for UK-established sellers selling their own UK-located stock. In those cases you account for the VAT yourself.
Can a Great Britain business register for IOSS directly?
Generally no. A business in Great Britain usually has to appoint an EU-based intermediary to register and act for it under IOSS. Businesses in Northern Ireland (and certain others, such as Norway) can register through HMRC without an intermediary.
I'm an overseas seller storing stock in a UK warehouse. Does the £135 rule apply?
No. Once your goods are in the UK at the point of sale, the £135 import test doesn't apply. As an overseas seller selling UK-located stock through eBay, eBay is the deemed supplier and accounts for the VAT whatever the order value. You may still need a UK VAT registration and remain liable for import VAT when the stock first entered the UK.
Key takeaways
- eBay acts as deemed supplier mainly for low-value imports (£135 or less) to UK consumers and for overseas sellers' UK-stored stock.
- The deemed-supplier role stops above £135, on B2B sales with a VAT number, and for UK sellers selling UK stock.
- IOSS handles low-value imports into the EU and Northern Ireland; OSS handles distance sales from Northern Ireland to the EU above £8,818 (10,000 euros).
- The £135 limit is per total consignment, not per item, and uses intrinsic value.
Cross-border VAT on eBay is a per-order question, and the line between "eBay's VAT" and "your VAT" is easy to cross without noticing. If you'd like that handled properly, get your VAT registrations, returns and marketplace reconciliations sorted by people who do this every day. Speak to a Zmartly accountant for eBay sellers, book a free 20-minute call and we'll map your exact setup.
