What is the VAT One Stop Shop (OSS) and does it apply to UK businesses?

Full answer

The One Stop Shop (OSS) is an EU-wide VAT simplification. Instead of registering for VAT in every EU country where you make business-to-consumer (B2C) sales, you register for OSS in one member state and file a single periodic return covering distance sales of goods and many services to consumers across the EU. The VAT is charged at the customer's country rate and then distributed by the tax authorities. There are three strands. Union OSS is mainly for EU-established businesses and for intra-EU distance sales of goods. Non-Union OSS covers certain services supplied to EU consumers by businesses established outside the EU. Import One Stop Shop (IOSS) covers distance sales of imported goods to EU consumers in consignments not exceeding EUR 150, letting the seller charge EU VAT at the point of sale so the customer avoids import VAT and handling fees on delivery. Who this affects: UK (GB) businesses selling goods or digital and other services to consumers in the EU. Because GB is outside the EU and its VAT system after Brexit, GB sellers cannot use Union OSS for GB-origin supplies; they typically register for Non-Union OSS (for services) or IOSS (for low-value imported goods), often via an EU intermediary. Northern Ireland has special arrangements for goods under the NI Protocol. Worked example (mechanism): a GB online retailer shipping a GBP 40 item to a consumer in Germany can register for IOSS, charge German VAT at checkout, and report it through a single IOSS return -- avoiding separate German VAT registration and smoothing customs clearance. 2026/27 note: this is an EU system, so the specific country VAT rates and the EUR 150 IOSS limit are EU figures, not UK ones. UK domestic VAT remains 20% standard rate with a GBP 90,000 registration threshold. Check current EU guidance and your obligations before registering, as scheme rules and rates are set by the EU, not HMRC.

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