Since 1 July 2021, the EU has run a unified VAT regime for B2C cross-border sales of goods. For UK e-commerce sellers, post-Brexit, this reshaped the compliance map completely: the old distance-selling thresholds are gone, the €22 low-value consignment relief is gone, and UK businesses are now "non-Union" third-country sellers for every EU sale.
The Three Schemes
| Scheme | Used For | Filing |
|---|---|---|
| Union OSS | B2C sales of goods from stock held in one EU country to consumers in another EU country. Requires an EU establishment or EU-held stock. | Quarterly, single return |
| Non-Union OSS | B2C sales of services by non-EU sellers to EU consumers. Not for goods. | Quarterly, single return |
| IOSS | Goods shipped from outside the EU to EU consumers in consignments up to €150. | Monthly, single return |
The threshold does not apply to UK sellers
This is the single biggest misconception we see on UK e-commerce accounts. The €10,000 pan-EU distance-selling threshold, below which a seller can charge their home-country VAT rate, is only available to businesses established in the EU. A UK-established seller does not qualify, regardless of turnover.
That means a UK seller's first €1 of B2C sales into, say, Germany is subject to German VAT. The only questions are which scheme you use to collect and remit it, and whether the marketplace has done it on your behalf.
How to work out what applies to you
Scenario A, You ship direct from the UK
Low-value orders (<= €150): register for IOSS through a single member state, quote the IOSS number on the customs declaration, charge destination VAT at checkout. The parcel clears customs without the customer paying anything extra.
Above €150: IOSS cannot be used. The customer becomes the importer of record and pays VAT and any duty on delivery, which typically destroys the customer experience. For high-value goods, consider fulfilling from an EU warehouse instead.
Scenario B, You hold stock in one EU country (e.g. Amazon FBA Germany)
You need a local VAT registration in Germany because you are now storing goods there. For sales from that German stock to consumers in any other EU country, you can register for Union OSS in Germany and file a single quarterly return covering all 27 destinations. Sales to German consumers remain on the German return.
Scenario C, FBA Pan-EU (stock in multiple countries)
You need a local VAT registration in every country where Amazon stores your stock, typically some subset of Germany, France, Italy, Spain, Poland, Czechia. Intra-community stock movements between those warehouses must be declared on each country's VAT return. Union OSS still covers cross-border B2C sales to consumers in other EU countries, but the local registrations are non-negotiable.
Scenario D, All your EU sales go through Amazon
Under the Marketplace Deemed Supplier rules, Amazon is treated as the supplier for (i) imports into the EU up to €150, and (ii) sales from EU warehouses by non-EU sellers. Amazon collects and remits the VAT. You still need local registrations wherever stock is held, you still need to account for these sales in your UK books, and you still need to file the local returns, but the VAT collection side moves to Amazon.
How Marketplace Deemed Supplier Changes Your Records
When Amazon is the deemed supplier, your payout report shows the sale net of the VAT Amazon collected. Your UK accounts need to reflect that:
- The gross sale belongs in revenue at the price the customer paid, net of the VAT Amazon withheld, the marketplace has already discharged the VAT liability for you.
- The cost of the goods still needs to be recognised, see our inventory & COGS guide.
- Inbound stock movements into EU warehouses are still your movements and need declaring on local returns.
- Your UK VAT return should exclude these sales, they are outside UK VAT.
Common Errors
- Treating EU sales as UK-VAT zero-rated exports. They are not UK-VAT sales. This corrupts Box 6 and Box 8 on the UK VAT return and can trigger an HMRC enquiry.
- Registering for IOSS and charging destination VAT, but also charging UK VAT at checkout. Double taxation. The customer ends up paying 40%+ and your refund rate explodes.
- Enrolling into FBA Pan-EU without understanding the VAT registration footprint. Three weeks later, an Amazon warehouse in Poland holds your stock and you have a Polish VAT registration obligation you didn't know existed.
- Assuming Amazon handles everything. Amazon handles the VAT collection where it is the deemed supplier. It does not handle your local registrations, your Intrastat, your EC Sales List equivalents, or your UK corporation tax accounting.
FAQs
Does the €10,000 EU distance-selling threshold apply to UK sellers?
No. It is only available to EU-established businesses. A UK seller must account for destination VAT from the very first sale into the EU.
What is the difference between OSS and IOSS?
OSS covers goods already in the EU when sold (typically from EU-held stock). IOSS covers low-value goods (up to €150) shipped into the EU from outside. Different schemes, different return cycles, but both let you file one return instead of 27.
Does Amazon handle all my EU VAT?
Amazon handles VAT collection where it is the deemed supplier, low-value imports and sales by non-EU sellers from EU warehouses. You still need local VAT registrations wherever your stock is held, and you still account for these sales in your UK books.
Can I use IOSS if I ship from a UK warehouse?
Yes, for consignments up to €150. Above that limit IOSS cannot be used and the customer becomes the importer of record, which usually means switching to EU-held stock if you want a clean delivery experience at higher price points.