Key Takeaways
- Dual VAT frameworks apply: UK sellers face both UK rules (£135 threshold) and EU rules (€150 IOSS threshold) — compliance requires registration in both jurisdictions for cross-border sales.
- Marketplace deemed supplier rules shift liability: For goods ≤£135 sold through online marketplaces, the platform — not the seller — is responsible for collecting and remitting VAT.
- Northern Ireland operates under hybrid rules: The Windsor Framework keeps NI within the EU VAT system for goods, creating a distinct compliance path from GB.
- UK IOSS mirrors EU scheme: HMRC operates a parallel IOSS for low-value imports into the EU and NI, requiring monthly returns and mandatory intermediary appointment for non-UK businesses.
- No VAT registration threshold for overseas sellers: UK-established businesses register at £90,000; overseas sellers must register immediately when selling goods located in the UK.
- B2B reverse charge applies under £135: Sales to UK VAT-registered customers bypass point-of-sale VAT — buyer accounts via reverse charge with valid VAT number verification.
The Post-Brexit VAT Landscape
Online sellers moving goods between the EU and UK now operate under two separate VAT systems. What replaced the single market is a dual framework: UK rules for goods entering Great Britain, and EU rules for goods entering the EU27 — with Northern Ireland occupying a hybrid position under the Windsor Framework.
For e-commerce operators, this means maintaining parallel compliance tracks. A UK business selling to EU customers must understand the EU’s Import One Stop Shop (IOSS). An EU business selling into the UK must navigate HMRC’s £135 consignment threshold and point-of-sale VAT collection. See our guides on import VAT and postponed accounting and importing from the EU post-Brexit for the wider context. Get either wrong, and you face customs delays, customer dissatisfaction, and potential penalties.
The core principle both systems share: VAT is collected at the point of sale for low-value consignments, rather than at import. This shifts the administrative burden from customs authorities to sellers and marketplaces — but enables faster clearance for customers when done correctly.
UK Rules for Goods Imported from the EU
The £135 Consignment Threshold
For goods sold from outside the UK to customers in Great Britain, the critical value is £135. This determines whether VAT is charged at the point of sale or collected on import.
Consignments valued at £135 or below: The seller must charge UK VAT at the point of sale — standard rate (20%), reduced rate (5%), or zero rate. No customs duty is due. The seller is responsible for registering with HMRC and filing VAT returns, regardless of where established.
Consignments valued above £135: Normal import rules apply. VAT and any customs duty are collected at the border. The customer (or their customs agent) handles payment unless the seller has arranged DDP terms. Commercial invoices must clearly state consignment value to avoid disputes.
The £135 figure is based on intrinsic value — the price paid, excluding separately stated transport and insurance. Three items at £50 each in one shipment total £150, exceeding the threshold. HMRC aggregates all items in a single consignment — a calculation similar to determining landed cost for duty purposes.
Low Value Consignment Relief Abolished
Before Brexit, the UK operated a Low Value Consignment Relief (LVCR) that exempted imports under £15 from VAT. This was abolished for goods imported into Great Britain from outside the UK. The £135 threshold replaced it as part of the post-Brexit VAT reforms effective 1 January 2021.
Northern Ireland also lost LVCR for imports from outside both the UK and EU. However, NI retains EU VAT rules for goods from the EU, meaning the old €22 exemption no longer applies there either.
B2B Reverse Charge Mechanism
When selling to UK VAT-registered business customers, the rules change. For consignments at or below £135, the seller does not charge VAT if the buyer provides a valid UK VAT number. Instead, the buyer accounts for VAT through the reverse charge mechanism on their VAT return.
This prevents double taxation and keeps the system neutral for business buyers. However, the seller bears the responsibility of verifying the VAT number. HMRC provides an online VAT number validation service — use it and keep records of the check.
Online Marketplace Deemed Supplier Rules
Online marketplaces (OMPs) like Amazon, eBay, and Etsy now carry significant VAT liability under UK rules. The deemed supplier provisions shift responsibility from individual sellers to the platform in specific scenarios.
For goods valued at £135 or below: When sold through an OMP, the marketplace itself is liable for collecting and remitting VAT — not the individual seller. This applies regardless of where the seller is established.
For goods of any value located in the UK at the point of sale: If an overseas business sells goods already in the UK (held in a UK warehouse) through an OMP, the marketplace is deemed the supplier for VAT purposes. This captures the “fulfilment by Amazon” model.
For individual sellers using marketplaces, this can simplify compliance — the platform handles VAT. But sellers must understand when they remain liable (direct sales, goods above £135, goods not sold via OMP).
EU Rules for Goods Sold into the EU
The EU IOSS Scheme
The EU’s Import One Stop Shop (IOSS) launched on 1 July 2021. It covers distance sales of imported goods in consignments not exceeding €150. Sellers register for VAT in a single EU Member State and report all eligible sales through one monthly return.
How IOSS works: A seller registers in one EU country (the “Member State of identification”). They charge EU VAT at the customer’s location rate at the point of sale. The seller files a monthly IOSS return in their registered state, which distributes VAT to relevant Member States. Goods clear customs faster because VAT is pre-paid.
The €150 threshold: Like the UK’s £135 rule, the EU aggregates items in a single consignment. Three €60 items together exceed the threshold — normal import VAT and duty apply. The €150 limit is based on intrinsic value, excluding transport and insurance shown separately on the invoice.
Who can use IOSS: Any business selling low-value goods to EU consumers from outside the EU, including UK sellers post-Brexit. Registration is voluntary but offers faster customs clearance.
EU OSS for Intra-EU Distance Sales
Separate from IOSS is the One Stop Shop (OSS), which covers intra-EU distance sales — goods already within the EU sold to consumers in other EU countries. This matters for UK sellers who hold stock in EU warehouses.
If you store goods in an EU fulfilment centre and sell to customers across the EU, OSS lets you report all those sales through a single return. Without OSS, you would need VAT registration in every Member State where you have customers.
The EU-wide registration threshold for distance sales was abolished in 2021. The first sale into another EU country triggers OSS obligations (or multiple registrations if not using OSS).
Intermediary Requirements
Non-EU businesses using IOSS must appoint an intermediary established in the EU. This intermediary is jointly and severally liable for the VAT due — meaning they can be pursued by tax authorities if the seller defaults.
The intermediary requirement exists because enforcement across borders is difficult. The EU-based intermediary provides a local point of contact for tax authorities and ensures compliance. Similar rules apply to the UK IOSS scheme for non-UK businesses.
Appointing an intermediary adds cost but also provides expertise. Many intermediaries are specialist VAT compliance firms that handle registration, returns, and correspondence with tax authorities. The arrangement is similar to using a customs broker for import declarations — a local agent who handles compliance on your behalf.
EU Low Value Exemption Removed
Before July 2021, the EU operated a €22 VAT exemption for low-value imports. This was abolished as part of the e-commerce VAT package. All goods imported into the EU are now subject to VAT, regardless of value. The IOSS scheme simply provides a simplified mechanism for collecting it at the point of sale for consignments under €150.
The UK IOSS Scheme
HMRC operates a UK IOSS scheme that mirrors the EU model. It applies to businesses selling low-value goods into the EU and/or Northern Ireland. The UK scheme allows a single registration and monthly return for all eligible sales.
Who Needs UK IOSS
UK-established businesses selling goods valued at or below £135 to customers in the EU or Northern Ireland can use UK IOSS. The scheme is voluntary — sellers can instead register for VAT in each destination country or use the normal import process. For most operators, UK IOSS offers the simplest compliance path.
Key obligations under UK IOSS:
- Charge VAT at the customer’s location rate (EU Member State or NI)
- File monthly IOSS returns with HMRC
- Keep records for six years
- Include the IOSS VAT identification number on invoices and customs declarations
Registration Process
UK businesses register for IOSS through HMRC’s online portal. The process requires valid UK VAT registration (or application in progress), details of goods sold and target markets, bank details for VAT payments, and contact information for correspondence.
HMRC issues an IOSS VAT identification number upon registration. This number must be transmitted electronically to customs authorities for each consignment to enable the IOSS clearance pathway.
Monthly Return Requirements
UK IOSS returns are due monthly, regardless of sales volume. Even if no sales were made in a period, a nil return must be filed. The return includes total value of sales per VAT rate, total VAT due per VAT rate, and breakdown by EU Member State (for EU sales).
Payment is due by the end of the month following the reporting period. Late filing or payment triggers penalties — HMRC’s standard VAT penalty regime applies.
Intermediary Requirement for Non-UK Businesses
Non-UK-established businesses using UK IOSS must appoint a UK-based intermediary. The rules mirror the EU requirement: the intermediary is jointly liable for VAT due and acts as the local contact for HMRC.
This affects EU sellers post-Brexit. An EU business selling low-value goods to UK customers can use UK IOSS, but must appoint a UK intermediary. Many choose instead to register directly for UK VAT and handle returns without IOSS.
Northern Ireland — The Hybrid Position
The Windsor Framework
Northern Ireland’s position under the Windsor Framework keeps it within the EU’s single market for goods. NI follows EU VAT rules for goods, not UK rules — a unique arrangement within the United Kingdom.
For e-commerce sellers, NI creates a third compliance track. Goods moving from GB to NI are treated as exports. Goods from the EU to NI follow EU distance selling rules. Goods from outside both the UK and EU into NI have distinct treatment.
GB to NI Sales
When selling from Great Britain to Northern Ireland, the £135 threshold applies. VAT is charged at the point of sale for goods at or below £135. Because NI remains in the EU VAT area for goods, sellers must also consider EU IOSS if selling to both NI and EU27 customers.
EU to NI Sales
Distance sales from the EU to Northern Ireland use EU OSS rules. An EU seller shipping to NI customers reports through their OSS return. The £70,000 distance selling threshold previously applied to NI has been replaced by the EU-wide OSS framework.
Imports from Outside UK and EU
Goods entering Northern Ireland from outside both the UK and EU have LVCR removed. VAT is due on all consignments. IOSS can be used for consignments under €150 to collect VAT at point of sale.
Practical Implications
For sellers, the NI position means separate tracking of NI versus GB sales, understanding when EU OSS applies versus UK IOSS, ensuring customs declarations correctly identify NI (not “UK” generically), and potentially needing both UK and EU VAT registrations. Our step-by-step customs clearance guide covers the declaration side of this process.
Online Marketplaces — Deemed Supplier Rules Compared
Both the UK and EU operate deemed supplier rules for online marketplaces, but the thresholds and scope differ.
UK Marketplace Rules
UK rules make OMPs liable for VAT on goods valued at £135 or below sold through the platform (regardless of seller location), and goods of any value located in the UK at point of sale sold by overseas sellers through the platform.
The marketplace must charge VAT, file returns, and maintain records. Individual sellers are relieved for covered transactions but remain liable for direct sales and goods above the threshold. This is distinct from DDP vs DAP Incoterms — marketplace deemed-supplier rules are a VAT mechanism, not a delivery-term choice.
EU Marketplace Rules
The EU’s deemed supplier rules are broader. OMPs are treated as the supplier for goods imported from outside the EU in consignments not exceeding €150, and goods of any value sold by non-EU sellers to EU customers (with limited exceptions).
This second category is wider than the UK rule. An EU marketplace selling goods from a Chinese seller to an EU customer is liable for VAT even if goods exceed €150, unless the seller has EU establishment or goods are already in free circulation.
Compliance Obligations for Marketplaces
Marketplaces in both jurisdictions must identify goods location at point of sale, determine seller establishment status, apply correct thresholds (£135 vs €150), charge VAT at customer’s location rate, transmit IOSS numbers to customs, and file separate UK and EU returns. For individual sellers, understanding when you remain liable versus when the platform takes over is essential.
Practical Compliance Checklist
For UK Sellers Selling to the EU
- Determine if IOSS suits your model: IOSS simplifies clearance for low-value goods (under €150) to EU consumers. For higher-value goods or B2B, normal import procedures may be preferable.
- Register for UK IOSS: Apply through HMRC’s portal. Allow processing time before launching EU sales.
- Appoint an intermediary if needed: Non-UK businesses using UK IOSS require a UK intermediary. UK businesses selling into the EU need an EU intermediary for EU IOSS.
- Configure checkout: Charge VAT at the customer’s EU Member State rate. Display prices inclusive of VAT.
- Include IOSS number on documentation: Customs declarations and invoices must carry your IOSS VAT identification number.
- File monthly returns: Nil returns are still required. Late filing triggers penalties.
- Keep records for six years: Maintain invoices, customs declarations, and proof of VAT payment.
For EU Sellers Selling to the UK
- Understand the £135 threshold: For goods at or below £135, charge UK VAT at point of sale. Register with HMRC for UK VAT.
- Consider marketplace sales: If selling through Amazon UK or similar, the marketplace may handle VAT — confirm in your seller agreement.
- Verify B2B customers: For sales to UK VAT-registered businesses, validate VAT numbers and apply reverse charge.
- Northern Ireland is different: NI follows EU VAT rules for goods. An EU seller shipping to NI may use OSS rather than UK VAT registration.
- Appoint a UK intermediary for UK IOSS: Non-UK businesses need a UK intermediary for the UK IOSS scheme.
For All Cross-Border E-Commerce Sellers
- Map stock locations: Where goods are stored at point of sale determines which VAT rules apply.
- Understand deemed supplier rules: If selling through marketplaces, confirm whether VAT liability sits with you or the platform.
- Invest in compliance technology: Manual VAT calculation across jurisdictions is error-prone. Consider tax automation software.
- Monitor threshold changes: The £135 and €150 figures have been stable since 2021, but subscribe to HMRC and EU Commission updates.
- Train customer service teams: Ensure your team can explain when VAT charges apply and why.
Key Takeaways
- Two thresholds govern e-commerce VAT: £135 for UK imports, €150 for EU imports. Consignment value is aggregated across all items in one shipment.
- Point-of-sale VAT collection is now standard: Low Value Consignment Relief is abolished in both jurisdictions. VAT is due on all imports, collected either at sale or at border.
- Marketplaces carry significant liability: Deemed supplier rules make OMPs responsible for VAT on many transactions — understand when you remain liable versus when the platform takes over.
- Northern Ireland operates under hybrid rules: The Windsor Framework keeps NI in the EU VAT system for goods, creating distinct compliance obligations from GB.
- UK IOSS mirrors EU IOSS: HMRC’s scheme allows single registration and monthly returns for low-value sales into the EU and NI. Intermediaries are mandatory for non-domestic businesses.
- B2B reverse charge applies under thresholds: Sales to VAT-registered customers bypass point-of-sale VAT — verify VAT numbers and keep records.
- Compliance requires parallel tracking: UK and EU obligations are separate. Sellers need systems to track sales by destination, apply correct rates, and file separate returns.
Frequently Asked Questions
Do I need to register for VAT in every EU country I sell to? No — if you use the IOSS or OSS schemes, you register in one Member State and report all sales through a single return. Without these schemes, you would need separate VAT registration in each country where you have customers.
What happens if I exceed the £135 or €150 threshold? Normal import procedures apply. VAT and any customs duty are collected at the border from the customer (unless you’ve arranged DDP terms). You do not charge VAT at the point of sale for these consignments.
Can I use IOSS for B2B sales? No — IOSS is for B2C distance sales only. B2B sales use the reverse charge mechanism. The customer accounts for VAT on their return if they have a valid VAT number.
How long does IOSS registration take? HMRC typically processes UK IOSS applications within 2-4 weeks. EU Member States vary — some process within days, others take several weeks. Plan your launch timeline accordingly.
What records must I keep for IOSS? Invoices, proof of VAT payment, customs declarations, and evidence of the customer’s location. HMRC requires records to be kept for six years. EU Member States have similar requirements.
Can I switch between IOSS and normal import procedures? Yes — IOSS is voluntary. You can use it for some consignments and normal procedures for others. However, you must apply the correct process consistently based on consignment value and customer type. Mixing approaches within a single order creates customs complications.