Selling to the EU from the UK: VAT on goods and digital services, OSS and IOSS

VAT when a UK business sells to the EU - zero-rated exports, EU import VAT, the €150 IOSS limit, OSS for digital services and Northern Ireland rules.

VAT
Self-employed (SA)
Company (LTD)
UK-wide
Northern Ireland

The short answer

A business in Great Britain that sends goods to an EU customer is exporting: the sale is zero-rated for UK VAT if the goods leave the UK and you keep the evidence, and VAT is then charged on import in the EU. For consignments up to €150 sold to consumers you can collect the EU VAT at checkout instead, through the Import One Stop Shop (IOSS), using an intermediary in the EU or Northern Ireland. Digital services sold to EU consumers are taxed where the consumer lives from the first sale, usually through the non-Union One Stop Shop. Services to EU businesses are generally outside the scope of UK VAT, with the customer accounting for the VAT. A business moving goods from Northern Ireland follows EU-style rules for goods under the Windsor Framework instead, including the OSS Union scheme through HMRC.

VAT treatment of sales to EU customers by type of sale
What you sell, to whom	From Great Britain	From Northern Ireland
Goods to an EU business	Export, zero-rated with export evidence; EU import VAT on arrival	Zero-rated with the customer's EU VAT number, proof of removal and an EC Sales List
Goods to an EU consumer	Export, zero-rated with evidence; EU VAT at import, or charged at checkout via IOSS for consignments up to €150	Distance sale: UK VAT until the £8,818 pan-EU threshold, then VAT of the destination country, through the OSS Union scheme or local registration
Digital services to an EU consumer	VAT of the consumer's country from the first sale; non-Union OSS in one EU country, or register in each
Services to an EU business (general rule)	Outside the scope of UK VAT; the customer usually accounts for VAT under the reverse charge

Great Britain or Northern Ireland: which rules apply

What matters for goods is where the goods are when you sell them, not where your company is registered. VAT Notice 703 says goods located in Great Britain that are sent to an EU destination "should follow the export rules in this notice", while goods in Northern Ireland sent to an EU destination follow the rules for movements of goods between Northern Ireland and the EU (Notice 703, para 2.2). Under the Windsor Framework, Northern Ireland stays aligned with EU VAT rules for goods, which is why a Northern Ireland seller can use the EU's OSS Union scheme for goods and a Great Britain seller cannot use it for goods shipped from Great Britain.

For services there is no split. HMRC's Notice 741A says "The Northern Ireland Protocol only applies to goods. Services are outside the scope of the protocol" (Notice 741A, para 2.5), so a Belfast software company and a Bristol one follow the same place-of-supply rules.

One exception for Great Britain sellers: if you hold stock in an EU warehouse and send it from there to consumers in other EU countries, those are intra-EU distance sales, and the European Commission says a business not established in the EU can use the Union scheme for them, registering in the country the goods are dispatched from (Commission: Register to OSS). If you sell that EU-held stock through an online marketplace, the marketplace is usually the one accounting for the VAT (see marketplaces below).

Goods from Great Britain: zero-rated exports and the evidence you need

The law is VAT Act 1994 s.30(6): a supply of goods is zero-rated if HMRC are satisfied the supplier "has exported them" and any conditions in regulations or imposed by HMRC are met. Section 30(8), with regulations 129 and 133B of the VAT Regulations 1995, zero-rates indirect exports, where the overseas customer arranges the transport (Notice 703 para 1.3). HMRC sets the conditions in VAT Notice 703, and the paragraphs below marked "force of law" in that notice are binding.

Direct export: you send the goods outside the UK and arrange the transport yourself or appoint the freight agent, including by post or courier (para 2.8). This works for business and consumer customers alike.
Indirect export: the overseas customer or its agent collects the goods (for example ex-works) and arranges the export (para 2.9). It cannot be zero-rated if the customer is a UK-resident private individual, an overseas visitor taking the goods in personal baggage, or a customer with a UK place of business making taxable supplies (para 3.4).
Time limits (para 3.5, force of law): for ordinary direct and indirect exports, 3 months to export the goods and 3 months to obtain valid evidence, both counted from the time of supply. Longer limits apply to a few cases, such as goods processed or incorporated before export. Miss them, or lack the evidence, and you "must not zero rate the supply and must account for VAT at the appropriate UK rate".
Evidence (paras 6.2 to 6.5): evidence of the supply (order, contract, invoice, payment) plus either official evidence (an export declaration on the Customs Declaration Service with a departure confirmation, quoting the MRN or DUCR) or commercial transport evidence such as a waybill, bill of lading, certificate of shipment or a completed CMR. Together it must identify the supplier, customer, goods, quantities, value, destination and route.

Exports still count towards the UK registration threshold. Notice 700/1 lists exported goods as zero-rated supplies (para 2.4) and defines taxable turnover as all taxable supplies, including zero-rated ones, made in the UK or Isle of Man (para 3.4), so exports count towards the £90,000 threshold. If all or most of your supplies are zero-rated you can ask for exemption from registration (Notice 700/1, paras 2.4, 3.4 and 3.11). Walk through it with the VAT registration decision guide.

What happens on the EU side: import VAT, duty and who pays

Zero-rating in the UK does not make the sale VAT-free. When the goods enter the EU they are imported, and the EU's Your Europe service tells EU businesses that buying goods for business use from outside the EU means they "must generally pay VAT at the point of import", which they can usually deduct later (Your Europe: cross-border VAT). So a sale to an EU business normally ends with that business paying import VAT and reclaiming it on its own return.

For consumers, the Commission's e-commerce explanatory notes say that without IOSS, VAT is payable on import, and the EU country of import "can decide freely on the person liable to pay the import VAT (either the customer or the supplier or the electronic interface - Article 201 of the VAT Directive)" (Commission explanatory notes, section 4.1.4). Where the customer is liable, the sale itself is not taxable in the EU; where the supplier is liable, the notes say the sale becomes taxable in the EU, which can bring EU VAT obligations for you as seller.

Incoterms decide who does it in practice. They are contract terms set by the International Chamber of Commerce, not by HMRC. HMRC's summary of them describes DAP (Delivered at Place) as the seller placing the goods at the buyer's disposal "ready for unloading at the named place of destination", bearing the risk of getting them there; it is under DDP (Delivered Duty Paid) that the seller must "clear the products not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities" (HMRC: Incoterms). A consumer who receives a DAP parcel may be asked by the carrier to pay VAT and charges before delivery; selling DDP means taking on the import formalities and costs yourself.

Low-value parcels to EU consumers: the €150 IOSS limit

The EU's import scheme covers "goods in consignments of an intrinsic value not exceeding EUR 150", excluding goods subject to excise duty. Under it the seller charges the VAT of the customer's country at the point of sale and declares it on a monthly return; the import is then exempt from VAT (Commission: The One Stop Shop; Article 143(1)(ca) of the VAT Directive, per the Commission's explanatory notes).

Great Britain sellers need an intermediary. HMRC says businesses in countries outside the EU and Northern Ireland, "including Great Britain, must ask an intermediary to register and act on their behalf" (HMRC: using an intermediary). The intermediary can be registered with HMRC, which requires a UK VAT registration and a business address in Northern Ireland, or with an EU country, where the Commission says it must be established in the EU and registers you in its own Member State (HMRC: register as an intermediary; Commission: Register to OSS). HMRC says a client can be represented by only "one intermediary in Northern Ireland or an EU country at a time".
Northern Ireland sellers (and Norway) can register for IOSS directly with HMRC. HMRC's version of the scheme is framed in sterling, for consignments with "a value of £135 or less", and covers sales to consumers in the EU, Northern Ireland or both (HMRC: check if you can register).
Consignment value is the price the goods were sold for, excluding transport and insurance unless included in the price and not shown separately, and excluding other taxes and charges; items sent together are added up. Each consignment's customs declaration must carry the 12-digit IOSS number, so give it to your carrier.
Not covered: excise goods such as alcohol and tobacco, sales to VAT-registered businesses, and consignments over the limit, which go through the normal import rules.
Without IOSS, VAT is due at import. The Commission describes "special arrangements" under which the customer is liable and postal operators or carriers collect the VAT from the customer and pay it over monthly.

New EU charges on low-value parcels. A Commission addendum to the explanatory notes, revised on 6 October 2026, says the EU's €150 customs duty relief was abolished from 1 July 2026 and a temporary €3 fixed customs duty applies per item sold as a distance sale of imported goods in a consignment not exceeding €150, from 1 July 2026 until 30 June 2028 (Council Regulation (EU) 2026/382). The addendum also said a €2 Union handling fee was expected to apply to distance sales of imported goods from 1 November 2026; check the Commission's customs guidance for whether it is in force. Under IOSS no import VAT is charged on either amount, but if you charge either to the customer at the point of sale it becomes part of the price on which you charge VAT (Commission: guides and addendum). Ask your carrier or customs agent how these apply to your goods.

Selling through online marketplaces: the deemed supplier

Under Article 14a of the VAT Directive, a marketplace or platform that facilitates a sale is treated for VAT purposes as if it bought the goods from you and sold them to the customer. The Commission's explanatory notes say this covers two cases: goods imported in consignments not exceeding €150 sold to EU customers, whoever the seller is; and goods already in the EU sold to EU customers "irrespective of their value, when the underlying supplier/seller is not established in the EU", which includes a Great Britain business (explanatory notes, section 2.1.3).

HMRC's IOSS guidance says the same from the UK side: for low-value goods sold through an online marketplace to consumers in the EU or Northern Ireland, "the online marketplace will be responsible for reporting and paying any VAT due"; if the marketplace is registered for IOSS, its IOSS number goes on the customs declaration (HMRC). For digital services, HMRC says that if you sell to consumers through a third-party platform or marketplace, "the digital platform is responsible for accounting for VAT on the supply instead of you" (HMRC: digital services).

Budget 2026 (announced, not yet law): the OOTLAR says Finance Bill 2026-27 will extend UK online marketplace liability to UK businesses, making marketplaces collect VAT on sales by UK VAT-registered sellers and other UK businesses selling more than a per-platform threshold, from October 2027 (OOTLAR para 1.55). That measure is about UK VAT on UK sales; it does not change the EU rules on this page. Today, a UK seller on a marketplace accounts for UK VAT on its own UK sales.

Digital services to EU consumers: no threshold, non-Union OSS

Digital services here means telecommunications, broadcasting and electronically supplied services: e-books, apps, software downloads, streamed music and films, web hosting and pre-recorded online courses. HMRC's test is whether the service is delivered automatically with minimal or no human intervention; a live webinar, a PDF emailed by hand, or a course with a live tutor is not a digital service (HMRC: digital services to consumers).

Place of supply: where the consumer usually lives. These supplies "are not liable to UK VAT" and may be liable to VAT in the consumer's country (HMRC; Notice 741A section 14).
No threshold for UK sellers. The EU's €10,000 threshold applies only to a supplier established in a single EU country. The Commission's explanatory notes say it "does not apply to supplies of TBE services made by a supplier not established in the EU (non-Union scheme)" (section 3.2.7), so EU VAT is due from the first sale.
Non-Union OSS: a business with no establishment in the EU "can choose any Member State" as its Member State of identification, gets an EU-format number, and files a quarterly return covering services to consumers in every EU country (Commission: Register to OSS). The alternative is to register for VAT in each EU country where you have consumers. HMRC's page still calls the scheme "Non-Union VAT MOSS"; the EU renamed it when the mini One Stop Shop became the One Stop Shop on 1 July 2021. Once you opt in, the scheme covers all your qualifying supplies in all EU countries.
Evidence of location: unless one of HMRC's location presumptions applies (for example a Wi-Fi hotspot, a landline or a mobile SIM), HMRC says you must get and keep two pieces of information as evidence of where the consumer normally lives, such as billing address, IP address, bank details or SIM country code, and must ask the consumer to resolve it if they do not match. A customer who gives you no VAT number is treated as a consumer, though you may accept other evidence that it is in business (HMRC).

Other services to EU consumers. The general UK rule for business-to-consumer services is that they are supplied where the supplier belongs, so UK VAT is charged (Notice 741A para 6.2). But Notice 741A section 12 moves some services to where the customer belongs when supplied to "non-UK non-business customers", taking them outside the scope of UK VAT: they include consultancy, legal, accountancy and data-processing services, advertising, supplies of staff, and transfers of copyright and licences (para 12.2). Whether the EU country then expects you to register for its VAT is a question for that country's rules; the non-Union OSS covers any services to consumers whose place of supply is in the EU, not only digital ones (Commission).

Services to EU businesses: the reverse charge

Under VAT Act 1994 s.7A(2), a service supplied to a "relevant business person" is supplied in the country where the recipient belongs. HMRC's Notice 741A calls this the B2B general rule and says that where it applies "you should obtain commercial evidence showing that your customer is in business and belongs outside the UK. For EU customers their VAT registration numbers is the best evidence" (para 6.3). A customer who cannot show business status is treated as a consumer. The supply is outside the scope of UK VAT (para 2.1).

On the EU side, Your Europe tells EU businesses that when they receive services for business purposes from a supplier outside the EU they "should usually pay VAT at the applicable rate in your country ... (using the reverse charge procedure)". You invoice without UK VAT, and your customer self-accounts. The general rule gives way to special rules for, among others, services connected with land, admission to events and passenger transport, so check Notice 741A before relying on it. Services whose place of supply is outside the UK are not supplies made in the UK, so they do not count towards UK taxable turnover (Notice 700/1 para 3.4); para 2.9 also lets a UK business that only makes such supplies register voluntarily in some cases.

Northern Ireland: OSS Union scheme and B2B dispatches

Sales to EU businesses are zero-rated if the customer is VAT-registered in an EU country and has given you that number, the goods leave Northern Ireland for an EU country, and you submit an accurate EC Sales List. The usual time limit to remove the goods and get evidence is 3 months from the time of supply (paras 4.3 and 4.4 of HMRC's NI-EU guidance).
Sales to EU consumers are distance sales. You charge UK VAT until your distance sales to the whole EU exceed the pan-EU threshold of £8,818 (€10,000) in the current or the preceding calendar year, then VAT of each destination country. You can opt in earlier. Excise goods are outside the threshold (paras 6.5 to 6.10).
OSS Union scheme through HMRC: one quarterly return and payment for all eligible distance sales to EU consumers. You must be UK VAT-registered and tell HMRC you sell goods from Northern Ireland; a business below the UK threshold can register for UK VAT only for OSS purposes. To use the OSS for your first eligible sale, register by the 10th day of the following month. Records must be kept for 10 years (HMRC: check how to report; HMRC: register).
Digital and other services from Northern Ireland follow the same UK services rules as Great Britain, including the non-Union OSS for digital services to EU consumers (Notice 741A para 2.5).

Budget 2026 (announced, not yet law): the OOTLAR says Finance Bill 2026-27 will amend Schedule 9ZA to the VAT Act 1994 "in respect of distance sales of goods to consumers in Northern Ireland from the EU", from 1 January 2027 (para 1.54). That concerns EU sellers shipping into Northern Ireland, not Northern Ireland sellers shipping out.

Related guides and tools

UK VAT rates guide: standard, reduced and zero rates in the UK.
Should you register for VAT? How exports and services affect the threshold.
VAT calculator: add or remove UK VAT from a price.
VAT margin schemes: second-hand goods, art and antiques.

EU VAT rates for each country are in the European Commission's Taxes in Europe Database, which HMRC's IOSS and OSS guidance points to. This page explains the rules; it does not cover excise goods, new means of transport, goods installed or assembled for the customer, or the separate rules for each EU country once you register there.

Frequently asked questions

Do I charge UK VAT when I sell goods from Great Britain to an EU customer?

Not if you meet the export conditions. HMRC treats goods sent from Great Britain to an EU destination as exports under VAT Notice 703, and an export can be zero-rated if the goods leave the UK and you obtain evidence of export and of the supply, generally within 3 months of the time of supply. Without that evidence you must account for UK VAT. VAT is then normally charged on import in the EU country of arrival.

What is the IOSS and can a business in Great Britain use it?

The Import One Stop Shop lets a seller charge EU VAT at checkout on goods sent from outside the EU in consignments with an intrinsic value not exceeding €150, so the import itself is VAT-exempt. A business in Great Britain can use it only through an intermediary: one established in the EU, or one registered with HMRC with a business address in Northern Ireland. It cannot be used for excise goods or for sales to VAT-registered businesses.

Is there a threshold before I charge EU VAT on digital services to consumers?

Not for a business established outside the EU. The European Commission says the €10,000 threshold does not apply to supplies of telecommunications, broadcasting and electronic services made by a supplier not established in the EU, so EU VAT is due in the consumer's country from the first sale. You can register for the non-Union One Stop Shop in one EU country or register in each country where you have consumers.

Do I charge VAT on services to an EU business customer?

Under the general rule, no UK VAT. HMRC Notice 741A says B2B general rule services are supplied where the customer belongs, so they are outside the scope of UK VAT, and the EU business customer usually accounts for VAT in its own country under the reverse charge. Keep the customer's VAT number or other evidence that it is in business. Special rules, such as for land-related services, override the general rule.

Can a Northern Ireland business use the One Stop Shop for goods?

Yes. Under the Windsor Framework, a UK VAT-registered business selling goods from Northern Ireland to EU consumers can use the OSS Union scheme through HMRC, filing one quarterly return. UK VAT applies to those sales until they pass the £8,818 (€10,000) pan-EU threshold in the current or the preceding calendar year, unless you opt to account for VAT in the destination countries earlier.

Who pays the import VAT when goods arrive in the EU?

It depends on how the sale is set up. Under IOSS the import is exempt and the seller has already charged VAT. Without IOSS, VAT is due at import, and each EU country decides who is liable. HMRC's summary of the Incoterms puts import clearance and import duty on the seller only under Delivered Duty Paid (DDP).