If you sell to EU customers from the UK, the VAT picture changed completely after Brexit. The old "distance-selling thresholds" that let you trade for a while before registering anywhere no longer apply to you. You are now a non-EU seller in the EU's eyes, and that changes when, where and how you owe VAT.
The good news is there are two schemes built to simplify it: OSS and IOSS. The catch is that they were designed mainly for EU-based businesses, so as a Great Britain seller you have to understand exactly which one fits, when you can use it, and when you cannot.
This guide explains the rules in plain English: when an EU sale creates a VAT liability, how IOSS handles low-value parcels, how OSS handles goods already inside the EU, and the single fact that catches most growing sellers out, that where your stock sits decides where you register.
We have grounded every rule in HMRC and European Commission guidance, with sources at the end. EU VAT is technical and moving fast (the EU is reforming low-value import rules from 2026), so treat this as a solid map, not personalised advice.
Do the old EU distance-selling thresholds still apply to UK sellers? {#distance-selling}
No. This is the first thing to unlearn.
Before Brexit, a UK seller could ship goods to EU consumers and only had to register for VAT in another EU country once sales there passed that country's distance-selling threshold. Those country-by-country thresholds were scrapped across the EU in July 2021 and replaced with a single EU-wide threshold of 10,000 euros (European Commission, VAT One Stop Shop).
Here is the part that catches people out. That 10,000 euro threshold only helps businesses that are established in an EU member state. As a Great Britain business you are a non-EU seller, so the threshold does not apply to you at all. There is no tax-free run-in. Depending on the route your goods take, a VAT obligation can arise on your very first sale into the EU.
So the practical mental model is: forget thresholds, and instead ask "where are my goods at the moment of sale?" That single question drives everything below.
When do I owe EU VAT on sales into the EU? {#when-owe-eu-vat}
It comes down to two scenarios, and they are treated very differently.
Scenario 1: goods are shipped from the UK to an EU customer (import route). The goods leave Great Britain and are imported into the EU. EU import VAT (and potentially duty) becomes due when they cross the border. For consignments with an intrinsic value of 150 euros or less, you can use IOSS to charge and collect the VAT at checkout instead. Above 150 euros, normal import VAT and customs procedures apply.
Scenario 2: goods are already inside the EU when sold (domestic route). If you hold stock in an EU warehouse (for example, an Amazon fulfilment centre in Germany or a third-party logistics site in the Netherlands), the sale is a domestic or intra-EU supply, not an import. That triggers an EU VAT registration where the stock sits, and OSS can then simplify reporting your sales to consumers in other EU countries.
One point that reassures a lot of sellers: when goods physically leave Great Britain for export, the UK side of the sale is normally zero-rated for UK VAT, provided you get and keep valid evidence of export (gov.uk, VAT on goods exported from the UK). So you are not charging UK VAT and EU VAT on the same sale. The VAT shifts to the EU side. Getting that evidence right matters, because without it HMRC can deny the zero rate.
What is IOSS and should I use it? {#what-is-ioss}
Talk to an e-commerce accountant →
IOSS stands for Import One Stop Shop. It is the EU scheme for distance sales of low-value goods imported into the EU, meaning consignments with an intrinsic value not exceeding 150 euros (European Commission, VAT One Stop Shop).
Without IOSS, your EU customer's parcel can be held at the border until import VAT (and a handling fee from the courier) is paid. That is the surprise-charge-on-the-doorstep experience that wrecks conversion and triggers refunds. With IOSS, you charge the correct destination-country VAT at checkout, the parcel clears customs smoothly, and you report it all on a single monthly IOSS return.
The big catch for UK sellers: as a non-EU business you generally cannot register for IOSS directly. You must appoint an EU-established intermediary, a taxable person based in the EU who registers and accounts for IOSS on your behalf and is jointly responsible for the VAT (European Commission, VAT One Stop Shop). That usually means paying an intermediary or VAT-compliance provider a monthly fee.
A few practical points:
- IOSS only covers consignments up to 150 euros intrinsic value. Sell something worth more and that parcel falls outside IOSS and goes through standard import VAT.
- "Intrinsic value" is the goods price, excluding transport and insurance shown separately and excluding the import VAT itself.
- If you sell through a marketplace (Amazon, eBay, Etsy), the marketplace is often the "deemed supplier" for these low-value imports and handles the IOSS VAT itself using its own IOSS number. You may not need your own at all for marketplace sales. Check each platform's rules.
Note on 2026 reform: the EU is in the process of removing the 150 euro customs-duty exemption for low-value imports, with transitional measures from 2026 and wider import-VAT reform planned later in the decade. The 150 euro IOSS VAT threshold is the position at the time of writing, but this is a fast-moving area. Confirm the current position before you build it into pricing.
What is OSS and when does it apply to a UK seller? {#what-is-oss}
OSS (One Stop Shop) is the sister scheme for goods that are already inside the EU when you sell them, plus certain cross-border services. It lets you report distance sales of goods to consumers across multiple EU countries on a single quarterly return, instead of registering separately in every country you sell to.
Here is the nuance for a Great Britain seller. The Union OSS scheme is built around being registered in an EU member state. You typically reach it by first holding stock in an EU country, registering for VAT there, and then using Union OSS to cover your B2C sales from that stock into other EU countries. So OSS is not a way to avoid an EU registration, it is a way to simplify reporting once you already have one.
Put simply:
- If your goods ship from the UK and are imported, think IOSS (for parcels up to 150 euros) or standard import VAT (above that).
- If your goods are already warehoused in the EU when sold, think EU VAT registration where the stock sits, then OSS to report your onward EU consumer sales.
Both schemes are optional simplifications. Neither removes the underlying obligation to account for VAT correctly. They just cut the number of returns you file. For a UK ecommerce business weighing all this up, our VAT services for UK businesses team models which combination actually fits your supply chain before you commit to registrations you may not need.
Why does where my stock is stored decide everything? {#stock-location}
This is the rule that quietly creates the biggest compliance bills, so it deserves its own section.
The moment you place stock inside an EU country, you usually create a requirement to register for VAT in that country, even if you have not made a single sale there yet. Holding goods in a member state is itself a taxable presence. This is the trap with EU fulfilment programmes: enrol your inventory into a warehouse in Germany, Poland, France, Czechia or Spain, and you can trigger a registration obligation in each country your stock is held.
That is very different from shipping every order from the UK, where the import route and IOSS can keep things relatively simple.
So before you opt into any "store my stock across Europe to speed up delivery" programme, map out exactly which countries your inventory will physically sit in. Each one is a potential registration, a potential local return, and a potential filing fee. The delivery-speed win is real, but so is the compliance cost, and sellers routinely discover the second part only after the registrations are overdue.
If you run a broader UK ecommerce operation and want this modelled end to end, our accounting for ecommerce sellers service exists for exactly this kind of cross-border planning.
Illustrative example: a UK Shopify brand shipping to France {#worked-example}
Illustrative example. Tomas runs a UK skincare brand on Shopify. He is UK VAT registered and ships everything himself from a unit in Manchester. He starts selling to consumers in France.
A typical French order is a 60 euro gift set.
- The goods are exported from Great Britain, so the UK sale is zero-rated for UK VAT (Tomas keeps the courier's proof of export).
- The consignment is well under 150 euros, so it qualifies for IOSS.
- Tomas appoints an EU-established intermediary and registers for IOSS through them.
- At his French checkout he charges French VAT at the standard rate of 20% on the goods, so the customer pays roughly 72 euros gross.
- He reports the French VAT (and VAT on any other EU sales) on one monthly IOSS return, and the intermediary remits it.
The parcel clears French customs without being held, and the customer pays nothing extra on the doorstep.
Now change one thing. Suppose Tomas later enrols stock into an Amazon fulfilment centre in Germany to win Prime-style delivery. His goods are now physically in Germany when sold. That is no longer an import, it is a domestic German supply, so he needs a German VAT registration, and he would use Union OSS to report his onward B2C sales from that German stock into France and elsewhere. Same brand, completely different VAT footprint, all because the stock moved.
This is illustrative. VAT rates, registration steps and intermediary requirements differ by country and change over time, so confirm the live position for your own setup.
What about Northern Ireland sellers? {#northern-ireland}
Northern Ireland is the one part of the UK with a genuinely different answer, because of the Northern Ireland Protocol.
For movements of goods, Northern Ireland stays aligned with EU VAT rules. That means a Northern Ireland seller can register to report distance sales of goods from Northern Ireland to the EU through the One Stop Shop, in a way a Great Britain seller generally cannot for GB-origin goods (gov.uk, VAT on movements of goods between Northern Ireland and the EU).
So if you are based in or fulfil from Northern Ireland, your route into the EU can look more like an EU seller's than a Great Britain seller's. If you operate across both GB and NI, the two flows are treated differently and need handling separately. This is genuinely one of the most error-prone corners of UK ecommerce VAT, and worth a proper review rather than guesswork.
Frequently asked questions {#faqs}
Do UK sellers still get an EU distance-selling threshold?
No. The old country-by-country distance-selling thresholds were replaced in July 2021 by a single 10,000 euro EU-wide threshold, and that threshold only applies to businesses established in an EU member state. As a Great Britain business you are a non-EU seller, so it does not apply to you. A VAT obligation can arise from your first qualifying sale into the EU.
What is the difference between OSS and IOSS for a UK seller?
IOSS is for low-value goods imported into the EU, consignments up to 150 euros intrinsic value, where you collect destination VAT at checkout and clear customs smoothly. OSS is for goods that are already inside the EU when sold, which usually means you are holding stock in an EU country, are registered for VAT there, and use OSS to report onward B2C sales to other EU countries on one return.
Do I need an intermediary to use IOSS?
Usually, yes. As a non-EU established business, a UK seller generally cannot register for IOSS directly and must appoint an EU-established intermediary who registers and accounts for the VAT on your behalf. If you sell only through marketplaces, the marketplace often handles the IOSS VAT itself, so you may not need your own IOSS number for those sales.
Does storing stock in an EU country trigger a VAT registration?
Yes, typically. Holding your goods in an EU member state is itself a taxable presence, so it usually creates a requirement to register for VAT in that country even before you make a local sale. This is the most common reason growing ecommerce sellers end up with multiple EU registrations, often through fulfilment programmes that spread stock across several countries.
Do I charge UK VAT as well as EU VAT on the same sale?
No. When goods physically leave Great Britain for export to the EU, the UK side of the sale is normally zero-rated for UK VAT, provided you hold valid evidence of export. The VAT liability shifts to the EU side, collected through IOSS, standard import VAT, or your EU registration, depending on the route. You do not pay both.
Is the 150 euro IOSS threshold changing?
The 150 euro intrinsic-value threshold is the position at the time of writing. The EU is reforming low-value import rules, including removing the 150 euro customs-duty exemption with transitional measures from 2026 and wider import-VAT changes planned later. Because this is fast-moving, confirm the current rules before building them into your pricing or systems.
Get your EU VAT setup right before it gets expensive
EU VAT for UK ecommerce is one of those areas where the cost of getting it wrong, backdated registrations, penalties, parcels stuck at customs, lands months after the mistake. The fix is to map your supply chain first and register only where you genuinely must.
If you sell into the EU and want IOSS, OSS and any EU registrations set up correctly for your actual stock and shipping routes, book a call with a Zmartly accountant through our VAT services for UK businesses. We will make sure your cross-border VAT is right before HMRC or an EU authority decides it for you.
