Glossary · UK
What is Dropshipping VAT?
The VAT rules that apply to UK dropshipping businesses, which usually must register once turnover passes £90,000 and may face import VAT depending on where suppliers and customers are based.
Full Definition
Dropshipping — selling goods online without holding stock, with a supplier shipping directly to the customer — is subject to normal UK VAT rules once a seller's UK taxable turnover exceeds the £90,000 VAT registration threshold (2026/27), at which point 20% standard-rate VAT must generally be charged on UK sales. The VAT position gets more complex because of where goods physically move: if a UK-based dropshipper's overseas supplier ships goods directly to a UK customer, import VAT and possibly customs duty can be due at the border, and low-value consignment relief no longer applies to most goods entering Great Britain from outside the UK following Brexit-era reforms. Selling to customers in the EU brings separate obligations, potentially requiring registration under the EU's Import One-Stop Shop (IOSS) or in individual EU states depending on volumes. Many dropshippers underestimate VAT exposure because they never physically handle stock, but VAT liability follows the sale to the end customer, not physical possession of goods.