VAT for e-commerce sellers — the UK reforms, OSS, IOSS and the compliance stack that actually scales.
Since 2021 the cross-border VAT regime has been rewritten twice — once by Brexit, once by the EU e-commerce package. Founders selling into two or more jurisdictions inherit a compliance stack, not a single VAT number. Here is how that stack fits together in 2026.
Cross-border e-commerce VAT since 2021 rests on three regimes. In the UK: consignments of £135 or less carry UK VAT charged at the point of sale, marketplaces are deemed suppliers for many overseas transactions, and non-established sellers have a zero registration threshold. In the EU: a single Union OSS return covers cross-border B2C flows of goods within the EU, and IOSS covers imported B2C goods of €150 or less with destination VAT collected at checkout. A UK-established e-commerce business scaling into the EU typically ends up with one HMRC VAT registration, one EU Member State of Identification for OSS, one for IOSS through an intermediary, and local VAT registrations in every country where it holds fulfilment stock. Getting the map right on day one is meaningfully cheaper than rebuilding it after HMRC or an EU Member State opens an enquiry.
- UK: consignments ≤ £135 imported to UK consumers carry UK VAT at the point of sale.
- UK: marketplaces are deemed suppliers for many non-established seller transactions.
- EU: Union OSS covers cross-border B2C goods within the EU under one Member State registration.
- EU: IOSS covers B2C imports of goods ≤ €150 with destination VAT collected at checkout.
- UK sellers have no €10,000 EU threshold — every EU B2C sale is destination VAT from the first euro.
- Multi-country stock still triggers a local VAT registration in each country of storage.
UK VAT rules for e-commerce sellers in 2026
The current UK regime for e-commerce sits on three foundations. First, the £90,000 registration threshold for UK-established businesses, measured on rolling 12-month taxable turnover — the same threshold used by every other UK business, with all the mechanics covered in our companion guide on the UK VAT threshold. Second, a zero threshold for non-established taxable persons (NETPs), meaning that any overseas company making a taxable UK sale must register from the first pound. Third, the £135 import consignment rule that flipped the point of VAT collection from the border to the checkout.
For B2C consignments of £135 or less imported into the UK from outside, VAT is charged and collected by the seller or online marketplace at the point of sale, at the UK standard rate of 20% (or the relevant reduced rate). The parcel enters the UK customs-cleared for VAT purposes. Import VAT and customs duty at the border remain the importer's obligation for consignments above £135 and for B2B transactions. Practically, this means every serious overseas e-commerce seller into the UK either holds a UK VAT registration or trades exclusively through deemed-supplier marketplaces.
The deemed supplier marketplace rules
A UK online marketplace — Amazon, eBay, Etsy, TikTok Shop, Not On The High Street — is treated as the deemed supplier of goods, and therefore the party accountable for UK VAT, in two situations. First, where the underlying seller is a non-established taxable person and the goods are already located in the UK at the point of sale (typical for Amazon FBA UK stock held by an overseas seller). Second, for any B2C sale where goods are imported into the UK in a consignment of £135 or less, regardless of where the underlying seller is established.
In both cases the marketplace charges UK VAT to the customer, collects it, and remits it to HMRC through its own UK VAT registration. The underlying seller records a business-to-business zero-rated supply to the marketplace. The seller still needs a UK VAT registration to file returns, track the zero-rated supplies to the marketplace, and hold the VAT number that the marketplace will require as documentation.
Marketplaces suspend seller accounts that cannot produce a valid UK VAT number when required. This has become the most common cause of overnight listing loss for overseas sellers on Amazon UK. Register before your first UK fulfilment shipment, not after the first suspension email.
EU One Stop Shop (OSS) — how it works for UK sellers
OSS is not one scheme but three. Union OSS covers cross-border B2C supplies of goods within the EU (goods shipped from one Member State to a consumer in another) and certain B2C services. Non-Union OSS covers B2C supplies of services by non-EU-established sellers to EU consumers — this is the route UK-established SaaS founders use. Import OSS (IOSS, covered in the next section) covers imported goods of €150 or less.
For a UK Limited Company selling digital services to EU consumers, non-Union OSS is the pragmatic default. Register in one EU Member State of Identification (Ireland, Netherlands and Luxembourg are common choices for UK-established sellers on language, process and portal quality); file one quarterly OSS return declaring the value of B2C digital services supplied to each Member State of consumption; pay a single VAT amount which the Member State of Identification then distributes. Without OSS, the seller would need to register for VAT in every Member State where even one consumer bought a subscription — for a SaaS founder serving 27 Member States, an impossible compliance burden.
For goods, Union OSS requires the seller to be established in the EU or to dispatch goods from a stock location inside the EU. A UK-established company with no EU establishment and no EU stock cannot use Union OSS for its goods flows — it will either use IOSS for low-value shipments, or pay destination-country import VAT and duty at the border. Moving fulfilment stock into an EU 3PL flips the seller into Union OSS eligibility and is often the single biggest compliance simplification available to a growing UK e-commerce brand.
EU Import One Stop Shop (IOSS)
IOSS applies to B2C sales of imported goods with an intrinsic value of €150 or less shipped from outside the EU to EU consumers. Under IOSS the seller charges the destination-country VAT rate at checkout, and the parcel enters the EU customs-cleared for VAT (customs duty at €150 or below is exempt under a separate rule). A single monthly IOSS return is filed in the EU Member State of Identification, with a single payment covering all EU destinations.
For a UK Limited Company, IOSS requires an EU-established intermediary — a professional fiscal representative who registers for and operates IOSS on the seller's behalf. Fees vary widely, typically £2,500–£6,000 per year plus a per- transaction charge. For a low-value e-commerce brand shipping a moderate volume of parcels to EU consumers, IOSS usually pays for itself many times over through better conversion rates: customers see the total price at checkout, not a delivery-time VAT and handling charge that regularly destroys the sale on receipt.
IOSS is a per-consignment rule, not a per-order rule. If three items are shipped in a single parcel with a total intrinsic value above €150, IOSS does not apply to that parcel — the shipment falls back to import VAT at the border. Structure your fulfilment logic to split high-value orders across consignments only where the customer experience supports it.
The 2024–2026 UK VAT reforms that matter
Three reforms in the current cycle materially affect e-commerce sellers. First, the £90,000 threshold uplift on 1 April 2024, unchanged in the 2025 and 2026 fiscal events — covered in depth in our threshold guide. Second, Making Tax Digital for VAT: every VAT-registered business, regardless of turnover, must keep digital records and submit returns through MTD-compatible software. Compliance is universal in 2026, and HMRC enquiries are increasingly automated on the back of MTD data.
Third, the Windsor Framework (in force since 2023) settled the Northern Ireland VAT position: goods movements between Great Britain and Northern Ireland are subject to specific VAT and customs rules that differ materially from a straight GB-EU flow. NI-established businesses can use Union OSS for cross-border B2C sales of goods to EU consumers; GB sellers cannot. Any e-commerce founder with warehousing options across GB and NI should model the two flows before choosing — Windsor Framework mistakes are among the most expensive cross-border errors we see corrected.
Alongside these three, HMRC's compliance activity against non-established sellers has intensified every year since 2021, particularly on Amazon FBA UK stock and TikTok Shop listings. Any overseas seller assuming that marketplace deemed-supplier rules eliminate the need for a UK VAT registration will find, sooner rather than later, that they do not.
Structuring your VAT registrations across the stack
Five common scenarios for a UK Limited Company e-commerce seller in 2026. The right combination depends on customer geography, fulfilment model and product value.
Standard UK VAT — you are the supplier of record; if turnover exceeds £90,000 rolling 12-month, register with HMRC and charge 20%. Marketplace deemed-supplier rules do not apply because you are UK-established. Simple.
Goods leave the UK zero-rated (with evidence of export) then hit import VAT and, if applicable, duty on entry to the EU. Under IOSS (≤ €150) you charge destination VAT at checkout and remit via an EU intermediary; above €150, DDP with a local VAT registration or DDU (buyer pays on delivery) — DDP wins on conversion.
Every EU country where stock is stored triggers a local VAT registration (Amazon operates warehouses in DE, FR, IT, ES, PL, CZ, NL). OSS covers cross-border B2C flows between those countries; local VAT filings still cover domestic supplies. Budget for 5–8 concurrent VAT registrations plus fiscal representatives where required.
Destination-country VAT from the first euro. Register for non-Union OSS in one EU Member State (Ireland, Netherlands and Luxembourg are common choices for UK sellers on language and process grounds); file one quarterly OSS return covering all EU B2C digital sales. No fiscal representative required.
Zero UK VAT threshold. Amazon is the deemed supplier for goods stored in the UK by non-established sellers and for imports ≤ £135. You must still hold a UK VAT registration, file nil-value returns and provide the marketplace with valid documentation, or your listings can be suspended.
UK VAT registration for e-commerce sellers
Fixed-fee UK VAT registration and MTD setup at £144. Marketplace deemed-supplier documentation included.
UK VAT Registration →Planning EU fulfilment or Amazon Pan-EU? A 20-minute call maps your VAT stack before your first shipment.
Book an advisor call →E-commerce VAT — advisor answers
What is the £135 UK import VAT rule?+
Since 1 January 2021, consignments of goods with a value of £135 or less that are sold to UK consumers and imported from outside the UK have UK VAT charged at the point of sale, not at import. The seller (or the online marketplace facilitating the sale) is responsible for collecting UK VAT at 20% at checkout and remitting it to HMRC through a UK VAT registration. Consignments above £135 continue to attract import VAT and (where applicable) customs duty at the border, paid by the importer of record.
What is a deemed supplier online marketplace?+
Under the UK rules, an online marketplace (Amazon, eBay, Etsy, TikTok Shop) is treated as the deemed supplier — the seller for VAT purposes — for two categories of transaction: goods of any value already located in the UK at the point of sale where the underlying seller is a non-established taxable person; and goods of £135 or less imported from outside the UK. The marketplace charges, collects and remits UK VAT to HMRC. The underlying seller records a zero-rated supply to the marketplace.
What is the EU One Stop Shop (OSS)?+
OSS is a single EU-wide VAT registration that lets an e-commerce seller declare and pay VAT on cross-border B2C supplies of goods and services to consumers across all 27 EU Member States through one quarterly return. A UK-established seller uses the non-Union OSS scheme for services and the Union OSS scheme (via an EU establishment or intermediary) for goods. It replaces the pre-2021 patchwork of local VAT registrations under the €10,000 EU distance selling threshold.
What is the Import One Stop Shop (IOSS)?+
IOSS is a special EU VAT scheme for B2C sales of imported goods with an intrinsic value of €150 or less shipped from outside the EU to EU consumers. Under IOSS the seller charges destination-country VAT at checkout and remits it via a single monthly IOSS return in one EU Member State of Identification. The parcel enters the EU customs-cleared without a separate import VAT charge on delivery. Non-EU sellers must appoint an EU-established intermediary to use IOSS.
Does the UK use OSS or IOSS?+
No. OSS and IOSS are EU schemes and cover EU cross-border B2C VAT only. A UK Limited Company selling from the UK to EU consumers can register for OSS/IOSS in an EU Member State (through an intermediary if the company has no EU establishment) to simplify EU VAT compliance. It has no effect on UK VAT — sales to UK consumers remain governed by UK VAT rules and the HMRC £90,000 threshold (or the zero threshold for non-established taxable persons).
Do I have to register for VAT in every EU country I sell to?+
Since 1 July 2021, cross-border B2C distance sales of goods within the EU can be declared under Union OSS in a single Member State of Identification — no separate registration required in every destination country, provided sales are shipped from your home Member State. Where goods are stored across multiple EU countries (Amazon FBA Pan-EU, for example), a local VAT registration is required in each country of storage in addition to OSS for cross-border flows.
What is the €10,000 EU B2C threshold?+
EU-established sellers benefit from a single €10,000 threshold covering total intra-EU cross-border B2C supplies of goods and telecoms, broadcasting and electronic services. Below the threshold, VAT is charged at the seller's home Member State rate. Above it, VAT is charged at the destination-country rate and OSS is used to declare it. UK-established sellers have no equivalent threshold — every EU B2C sale is destination-VAT from the first euro, because the UK is a third country.
How do UK sellers handle B2C VAT on services to EU consumers?+
For UK-established sellers of B2C telecoms, broadcasting and electronically supplied services (SaaS, apps, digital downloads, streaming) to EU consumers, VAT is chargeable at the destination-country rate from the first euro. Registration through non-Union OSS in one EU Member State lets a UK seller declare all EU B2C digital service VAT through one quarterly return. Without OSS, separate registrations in every Member State of consumption are required — a compliance burden most SaaS founders avoid at all costs.
What is the Windsor Framework and how does it affect Northern Ireland?+
Northern Ireland remains inside the EU VAT area for goods under the Windsor Framework (2023). Goods moving between GB and NI carry specific VAT and customs implications, and NI-established businesses can use OSS for cross-border B2C sales to EU consumers. Sales of goods from GB to consumers in NI are treated as UK domestic supplies with UK VAT. This is one of the most misunderstood areas of the post-Brexit VAT regime — take specialist advice before assuming a simple GB-EU flow.
When does a UK company need an EU establishment for OSS?+
Union OSS for cross-border B2C sales of goods requires the seller to be established in the EU or to fulfil goods from a stock location inside the EU. A UK company with no EU establishment can still register for Union OSS in the Member State where goods are dispatched from, provided it holds fulfilment stock there. For B2C digital services, non-Union OSS is available to UK companies without any EU presence — the entry point is a single EU Member State of Identification.
Do I need a fiscal representative in the EU?+
For IOSS, yes — a non-EU-established seller must appoint an EU-established intermediary to register for and operate IOSS on their behalf. For OSS, generally not — but individual Member States can require a fiscal representative for direct local VAT registrations outside OSS. France, Belgium, Portugal and Poland commonly impose this requirement on non-EU-established sellers holding local stock. Budget for £3,000–£8,000 per year per country for a professional fiscal representative.
How do you help e-commerce sellers with VAT?+
We handle UK VAT registration for e-commerce sellers at a fixed fee of £144, including MTD setup and marketplace deemed-supplier documentation. We do not provide tax advice or handle EU VAT registrations directly, but we introduce trusted specialist accountants and fiscal representatives across the EU for founders scaling into OSS, IOSS and multi-country FBA stacks. Contact us before your first EU shipment — not after.
This article is general guidance based on UK VAT legislation, HMRC published notices and EU e-commerce package rules current at July 2026. It is not a substitute for tailored tax advice and does not cover EU Member State-specific derogations. Rates, thresholds and rules change; verify against HMRC and EU Commission guidance before acting. UK Company Experts is a trading name of Seven Oak Prestige Ltd.
Related guides from our editorial library.
Browse all insights
