Grapevine Magazine - Are you up to speed on VAT compliance for cross-border goods?

Are you up to speed on VAT compliance for cross-border goods?

If you’re selling goods across borders, VAT compliance isn’t just another admin task – ignoring it can be expensive. The rules are complex, ever-evolving, and the cost of getting them wrong can hit both margins and reputation.

Why VAT compliance matters for e-commerce

Retailers selling via websites may or may not be based in the UK and often don’t have a physical presence in the market they’re selling into. Tax authorities in the UK and EU have introduced a series of measures to make sure online sales don’t slip through the cracks.

Because most retail customers are private consumers (B2C), VAT becomes part of the price they pay – unlike businesses, they can’t reclaim it. That means retailers need to know:

when VAT applies;
where it should be paid; and
who is responsible for collecting and accounting for it.

Sales through online marketplaces

Online marketplaces (OMPs) are now a key focus for tax authorities. Increasingly, the responsibility for VAT collection and reporting is being shifted to the platform itself.

sellers must confirm their VAT status and country of establishment to the OMP;
the OMP must then monitor transactions to ensure VAT is properly accounted for;
non-compliance doesn’t just affect the seller – it can also impact the marketplace’s reputation and liability.

VAT compliance in direct-to-customer sales

Where goods are sold directly to consumers, the rules depend on location and consignment value:

UK: Overseas sellers shipping goods to UK customers with a value of £135 or less must register for UK VAT and charge VAT at the point of sale.
EU: Goods with a value of €150 or less require VAT to be added at the time of sale. Sellers may need multiple EU VAT registrations – though the One Stop Shop (OSS) scheme allows for a single registration covering all EU countries.

Questions every retailer should ask

To stay compliant, online retailers need clarity on:

Is the customer B2B or B2C?
Where is the customer located, and how is that verified?
What are the terms of trade – who clears the goods into the destination country?
What is the value of the sales?
Is the sale being made through an online marketplace or directly?
What are the VAT and customs duty rates for the goods?
Does the country of destination require VAT registration of the seller?

VAT rules are still rooted in physical tests – for example, where the goods are located when title passes. But e-commerce blurs these boundaries, with sales and payments often made without a physical presence. This mismatch can create traps for the unwary.

Selling through a website may feel like a straightforward way to expand reach, but VAT compliance needs to be built into the plan from the outset. Understanding the rules avoids unexpected costs and keeps your business ahead of regulatory changes.

If you’re uncertain about your VAT position for cross-border sales, now is the time to review and plan. Our team can help you map your obligations, register where needed, and design a compliance process that fits your business model.

Get in touch with our experienced tax team today to safeguard your cross-border strategy.

Author: Debbie Jennings, VAT Director