Selling internationally opens up large opportunities for online retailers. It also brings new responsibilities, because value-added tax (VAT) rules vary from country to country and have changed significantly in recent years. For many sellers, VAT is a barrier to expanding into Europe, but understanding the basics makes it much less intimidating.

This guide covers the foundations: what VAT is, how the main EU rules for online sales work, the key terms you’ll hear, and where to find current rates and official guidance.

What is VAT?

Value-added tax (VAT) is a consumption tax charged on goods and services. It’s collected in stages along the supply chain: a VAT-registered business generally charges VAT on what it sells and can usually recover the VAT it pays on business purchases, and the end customer bears the final cost.

Every EU member state applies VAT, but each sets its own rates within limits set at EU level. Most countries have a standard rate, and many also apply reduced rates to certain categories, such as some foods, books, or children’s items, and sometimes zero rates. Which category a product falls into varies from country to country, so the same product can be taxed differently in different markets.

Because the rules depend on where a business is established, where its goods are, who the customer is, and what is sold, “VAT in Europe” is really a set of rules that interact.

Key VAT terms

• VAT registration: Being entered on a country’s VAT register, which generally allows a business to charge VAT and recover VAT on purchases, and requires it to file returns.
• B2C and B2B: Business-to-consumer sales (to private individuals) and business-to-business sales. The VAT treatment often differs between them.
• Place of supply: The country where a sale is treated as taking place for VAT purposes, which decides which country’s VAT applies.
• Distance sales: Sales of goods shipped to customers in another country.
• One Stop Shop (OSS): An EU scheme that lets sellers declare and pay VAT on certain cross-border sales through one return, instead of registering in each country.
• Import One Stop Shop (IOSS): An EU scheme for VAT on low-value goods imported into the EU from outside it.
• EORI number: An Economic Operators Registration and Identification number, used to identify businesses in customs dealings.
• Fiscal representative: A person or firm that acts for a non-resident business for VAT purposes in a country that requires one.
• Deemed supplier: In certain cases, an online marketplace is treated for VAT purposes as the seller of goods sold through it.

How EU VAT works for cross-border online sales

The EU’s VAT rules for online sales changed substantially on 1 July 2021, under the “e-commerce VAT package.” The European Commission’s One Stop Shop portal sets out the changes. Here are the main points in general terms.

The EU-wide €10,000 threshold

Before July 2021, each member state set its own “distance selling threshold” (often €35,000 or €100,000), above which sellers had to register for VAT in that country. Those thresholds were abolished and replaced by a single EU-wide threshold of €10,000 for cross-border sales to consumers in the EU.

Below the threshold, qualifying sales may remain subject to VAT in the country where the seller is established. Above it, VAT generally becomes due at the rate of the customer’s country, so sellers need to track where their sales are going.

The One Stop Shop (OSS)

The OSS simplifies reporting for cross-border consumer sales. Instead of registering for VAT in every country where they sell, a business can register for the OSS in one member state, then declare and pay the VAT due across the EU through a single return, which the tax authority passes on to the destination countries. OSS returns are filed quarterly.

There are different OSS schemes depending on the type of sale and where the business is based:

Scheme	What it generally covers	Return frequency
Union OSS	Cross-border sales of goods to EU consumers, certain services, and goods sold from stock held in the EU by non-EU sellers	Quarterly
Non-Union OSS	Services sold to EU consumers by businesses based outside the EU	Quarterly
Import One Stop Shop (IOSS)	Goods imported into the EU from outside it, in consignments of €150 or less	Monthly

Goods held in another EU country

The OSS doesn’t remove every local obligation. As a general rule, a business that holds stock in an EU country, for example in a warehouse or a marketplace fulfillment center, creates a local VAT presence there, and local registration is usually needed for sales made from that stock. Programs that move inventory between several countries can therefore involve registrations in more than one country, and the countries involved change over time. Check the program’s current list with the marketplace.

Imports and low-value goods

The EU’s VAT exemption for imported consignments worth €22 or less was removed in July 2021. For goods imported from outside the EU in consignments of €150 or less, the IOSS can be used to collect and declare VAT at the point of sale. Larger consignments are generally subject to import VAT at the border.

Businesses that ship into the EU usually need an EORI number for customs. It identifies the shipper on customs documents and supports the paperwork for import VAT. Freight forwarders typically ask for it, along with any VAT number.

Marketplaces as deemed suppliers

Online marketplaces are, in certain circumstances, treated for VAT purposes as if they bought and sold the goods themselves, which shifts responsibility for charging and declaring VAT to the marketplace. This applies, in general, to imported goods in consignments of €150 or less, and to some sales of EU-held goods by non-EU sellers. Whether a marketplace is the deemed supplier for a given sale depends on the details, and sellers on marketplaces should understand how each channel treats VAT.

Goods and services are treated differently

VAT rules aren’t the same for goods and services. For goods, VAT is generally tied to where the goods are when the sale is made and where they’re delivered. For services, the place of supply rules depend on whether the customer is a business or a consumer. For example, electronic services (such as digital downloads or streaming) sold to consumers in the EU are generally taxed in the customer’s country, wherever the seller is based, and the OSS schemes can be used to report them. Whether a particular product is a good or a service, or both, can change the VAT treatment, so it’s worth being clear about what exactly you sell and to whom.

Registration, returns, and records

Once registered for VAT in a country, a business is generally required to file periodic VAT returns. How often depends on the country and the size of the business, and may be monthly, quarterly, or annually. Some countries also require extra reports alongside VAT returns, such as sales lists or transaction listings.

Registered businesses can usually recover VAT charged on their business purchases, provided they hold valid invoices and records. Good records matter whichever scheme is used: customers’ countries, order values, product types, VAT charged, and import documents. Keeping order and customer location data organized across all your sales channels makes it easier to give your accountant or VAT adviser what they need.

Non-EU sellers and fiscal representation

Some EU countries require non-EU businesses to appoint a fiscal representative before they can register for VAT there, and the requirements differ by country. A fiscal representative acts for the non-resident business in dealings with the tax authority, and may be jointly liable for the business’s VAT debts, which is why providers can ask for bank guarantees or additional fees. Some schemes, such as the Non-Union OSS or IOSS, may involve appointing an EU-based intermediary.

Since the UK left the EU, UK-based businesses are generally treated as non-EU sellers for EU VAT purposes, and sales between the UK and the EU are treated as imports and exports. The UK also has its own VAT rules and registration threshold, set by HMRC.

Why compliance matters

VAT rules apply to businesses of every size. Tax authorities can impose fines, penalties, and interest where VAT isn’t charged, declared, or paid correctly or on time, and it can affect cash flow, especially for small and medium-sized sellers. Businesses that expand into new markets without checking the VAT rules sometimes find they owe backdated VAT, which costs time and money.

It’s a common mistake to assume that VAT rates, thresholds, and rules are the same in every EU member state. They aren’t, and they can change.

Key milestones

• 1 January 2021: After the Brexit transition period ended, the UK was treated as a non-EU country for VAT, and the UK’s Low Value Consignment Relief was abolished.
• 1 July 2021: The EU’s e-commerce VAT package took effect. National distance selling thresholds were replaced by the €10,000 EU-wide threshold, the OSS and IOSS were introduced, the €22 import VAT exemption was removed, and marketplaces took on a deemed supplier role in certain cases.
• Ahead: The EU has agreed further reforms, known as VAT in the Digital Age, which phase in changes such as digital reporting over the coming years. The European Commission’s website has the current timelines.

Standard VAT rates in the EU

The table shows standard VAT rates in the 27 EU member states, as of October 2026, compiled from published 2026 rate tables. Most countries also apply reduced rates to certain goods and services, which aren’t shown here. Rates can change during the year, so confirm the current standard and reduced rates with the relevant tax authority or the European Commission before relying on them.

Country	Standard rate	Country	Standard rate
Austria	20%	Italy	22%
Belgium	21%	Latvia	21%
Bulgaria	20%	Lithuania	21%
Croatia	25%	Luxembourg	17%
Cyprus	19%	Malta	18%
Czech Republic	21%	Netherlands	21%
Denmark	25%	Poland	23%
Estonia	24%	Portugal	23%
Finland	25.5%	Romania	21%
France	20%	Slovakia	23%
Germany	19%	Slovenia	22%
Greece	24%	Spain	21%
Hungary	27%	Sweden	25%
Ireland	23%

The rates range from 17% in Luxembourg to 27% in Hungary. The EU sets a minimum standard rate of 15%.

Where to find official guidance

• The European Commission’s VAT One Stop Shop portal, which explains the OSS and IOSS schemes
• Each country’s national tax authority, for local rates, registration, and filing rules
• HMRC, for UK VAT
• A qualified tax adviser or VAT specialist, for advice on your specific situation

FAQs