VAT on Distance Selling: Thresholds for UK Online Sellers in 2026/27
How VAT applies to distance selling from the UK to EU consumers in 2026/27, the EU One Stop Shop, and when a UK-based online seller must register for VAT abroad.
Why distance selling got more complicated after Brexit
Before Brexit, a UK seller shipping goods to EU consumers benefited from the EU's internal distance-selling rules: sell under a country-specific threshold and you charged UK VAT; sell over it and you registered for VAT in the buyer's country. Since the UK left the EU VAT area, that entire framework no longer applies to UK-based sellers. Every parcel sent from the UK into the EU is now technically an import from the EU's perspective, which brought import VAT, customs declarations and, for many small sellers, an unwelcome new layer of paperwork and cost.
VAT Calculator
Add or remove VAT from any amount. Supports 20%, 5% and 0% UK VAT rates.
Open VAT calculatorThe Import One Stop Shop (IOSS) — the main fix for small parcels
To reduce friction for low-value parcels, the EU introduced IOSS, which UK sellers can register for (usually through an EU-based intermediary, since non-EU businesses generally cannot register for IOSS directly without one). Once registered:
- VAT is charged at the point of sale, using the rate applicable in the customer's EU country.
- The parcel then moves through customs more smoothly, because VAT has already been collected — the customer does not face a surprise VAT and handling charge from the courier on delivery.
- This only applies to consignments valued at €150 or less (excluding transport and insurance costs charged separately in some interpretations, so sellers should check the precise valuation rules).
What happens above €150
For higher-value goods, IOSS does not apply, and the parcel is treated as a standard import: the buyer (or, in practice, often the courier acting on the buyer's behalf, adding an admin fee) pays import VAT and any applicable customs duty before the parcel is released. This can create an unpleasant surprise for a customer who was not warned at checkout, and is a common source of returns, disputes and negative reviews for UK sellers who do not clearly flag this at the point of purchase.
Marketplaces as "deemed suppliers"
Many EU member states, aligned with rules the UK itself also applies for imports into Great Britain, now treat online marketplaces (such as major platforms facilitating third-party sales) as the party responsible for charging and remitting VAT on qualifying transactions, rather than the individual seller. Where this applies, the marketplace effectively becomes the "deemed supplier" for VAT purposes on that specific sale, and the underlying seller does not need to separately register or account for VAT on it.
This is a significant simplification for sellers who trade primarily through large marketplaces, but it typically only covers the transactions the marketplace itself processes. A seller who also runs an independent website store, drop-ships directly, or fulfils some orders outside the marketplace's systems may still have a separate EU VAT obligation for those transactions.
The UK side of the equation is unaffected
None of the EU distance-selling changes alter the domestic UK VAT registration threshold, which remains £90,000 of UK taxable turnover in a rolling 12-month period (or on future expectation of exceeding it within 30 days). A seller focused entirely on EU exports still needs to monitor their UK taxable turnover separately, because UK VAT registration is triggered by UK-taxable supplies, and EU distance sales handled via IOSS or a destination-country registration are a distinct, additional compliance track.
Self-Employed Tax Calculator
Calculate income tax, Class 2 and Class 4 National Insurance for self-employed and sole traders for 2025/26.
Open Self-Employed Tax calculatorPractical steps for a small UK seller
- Establish whether sales are made directly (own website) or via a marketplace, and identify which transactions the marketplace is deemed to supply.
- For direct sales of goods valued at €150 or less into the EU, register for IOSS through an EU-established intermediary.
- For direct sales above €150, ensure checkout messaging is transparent about potential import VAT and duty payable by the customer on delivery.
- Track UK taxable turnover separately against the £90,000 UK VAT registration threshold, regardless of the EU treatment of export sales.
- Review Northern Ireland sales separately, since the Windsor Framework can apply a different VAT and customs treatment than sales to Great Britain or the wider EU.
Frequently asked questions
What is distance selling for VAT purposes?
Distance selling refers to selling goods directly to consumers (not VAT-registered businesses) in another country, typically via a website, catalogue or online marketplace, where the seller arranges delivery to the customer. The VAT treatment depends on where the buyer is located and the value of the goods.
Do the old EU distance-selling thresholds still apply to UK sellers?
No. Since Brexit, the UK is treated as a third country for EU VAT purposes. The old per-country distance-selling thresholds (for example, the old €35,000/€100,000 national limits) no longer apply to UK-based sellers shipping into the EU — instead, UK sellers face import VAT and, usually, a requirement to register in the EU under the Import One Stop Shop (IOSS) or in the destination country directly.
What is the Import One Stop Shop (IOSS)?
IOSS is an EU VAT scheme allowing non-EU sellers, including UK businesses, to register in a single EU member state and charge, collect and remit VAT at the point of sale for consignments valued at €150 or less, rather than the buyer facing import VAT and customs handling fees on delivery.
Does IOSS apply to goods worth more than €150?
No. For consignments over €150, IOSS does not apply, and normal import VAT and customs declarations apply in the destination country, typically collected from the customer (or a delivery agent) at the point of import, which can create unexpected charges for the buyer.
Do I still need to register for UK VAT if I only sell to EU customers?
Yes, if your UK taxable turnover (including UK sales) exceeds the UK VAT registration threshold of £90,000, you must register for UK VAT regardless of where your customers are based. EU distance sales are a separate, additional consideration on top of your UK VAT position.
How does selling through a marketplace like Amazon or eBay change the VAT position?
Many online marketplaces are now treated as the 'deemed supplier' for VAT purposes on both UK and EU sales below certain value thresholds, meaning the marketplace itself collects and remits the VAT rather than the individual seller — this significantly simplifies compliance for sellers using marketplace fulfilment, but sellers should confirm which transactions the marketplace is handling on their behalf.
What happens if I do not register where required for distance selling?
Non-compliance can result in goods being held at customs, additional charges falling on the customer (harming customer experience and returns), and potential penalties or interest from the relevant tax authority if VAT should have been charged, collected and remitted but was not.
Does distance selling to Northern Ireland follow EU or UK rules?
Northern Ireland has a dual position under the Windsor Framework — goods movements between Great Britain and Northern Ireland, and between Northern Ireland and the EU, can be subject to different VAT and customs treatment than goods moving purely within Great Britain or purely to the rest of the EU, so sellers trading with Northern Ireland customers should check current guidance carefully.
Can a small UK seller avoid all EU VAT registration by using a fulfilment or marketplace service?
In many cases, yes, for the specific transactions the marketplace is deemed to supply, because the marketplace assumes the VAT collection and remittance obligation. However, sellers who also fulfil orders directly from their own website (rather than solely through a marketplace) may still need their own IOSS or destination-country registration for those direct sales.
Is VAT charged on services sold at a distance the same way as goods?
No. Digital services sold to EU consumers follow a different regime (the EU's One Stop Shop for services, separate from IOSS for goods), with VAT generally due in the customer's country of residence from the first sale, without a low-value threshold exemption in the way IOSS provides for goods under €150.
Try the calculators
Related reading
VAT Flat Rate Scheme and the Limited Cost Trader Rule Explained (2026/27)
How the VAT Flat Rate Scheme works in 2026/27, why the 16.5% limited cost trader rate catches many service businesses, and when the scheme still saves money.
Going Self-Employed Mid-Career in 2026/27: Trading Allowance to VAT Threshold
Leaving employment to go self-employed in 2026/27? Trading allowance, NI, payments on account, the £90,000 VAT threshold and when to register, explained.
UK CIS Domestic Reverse Charge VAT: Construction Guide 2026
How the Construction Industry Scheme domestic reverse charge VAT works in 2026 -- who it applies to, invoicing rules, cash flow impact, and common mistakes.