UK and EU VAT for US brands: OSS, IOSS and local registration, explained

US sales tax starts once you cross a state's economic nexus threshold. UK and EU VAT works the other way around for most US brands: a business with no local establishment usually gets no threshold at all, and the first sale to a consumer can create the obligation to register.

Which registration you need depends on two things: where your stock sits when the customer places the order, and whether you sell through your own store or a marketplace. Here is how the pieces fit.

The basics

• VAT is part of the price the consumer sees. Showing a net price and adding VAT at checkout looks wrong to UK and EU shoppers, and it breaks price display rules.
• Rates differ by country. The UK standard rate is 20%. In the EU, each country sets its own rates; the standard rate must be at least 15%. For consumer sales, you usually charge the rate of the customer's country.
• Overseas sellers have no threshold. The UK's £90,000 registration threshold applies only to businesses established in the UK. A business without a UK establishment must register from its first taxable supply in the UK. In the EU, the €10,000 threshold for cross-border consumer sales is available only to businesses established in an EU country.

Scenario 1: parcels from the US to UK consumers

If a consignment is worth £135 or less and you sell it directly to a UK consumer, you charge UK VAT at checkout and pay it to HMRC on your UK VAT return. No import VAT is collected at the border, which means you need a UK VAT registration from your first sale.

If you sell through an online marketplace, the marketplace accounts for the VAT on these sales instead.

Above £135, the parcel is treated as a normal import: import VAT and any duty are paid at the border. Unless you ship duties paid, your customer pays them on delivery, usually with a carrier fee on top.

Scenario 2: parcels from the US to EU consumers

For consignments worth €150 or less, the EU offers the Import One-Stop Shop (IOSS). You charge the customer's local VAT at checkout, file one monthly IOSS return covering all EU countries, and the parcel clears customs without VAT being collected at the door. A business established outside the EU can only use IOSS through an intermediary established in the EU.

IOSS is optional. Without it, VAT is collected from your customer on delivery, usually with a handling fee from the carrier, and some customers refuse the parcel.

Two more points:

• From 1 July 2026, low-value parcels also carry a flat €3 customs duty per item, counted by tariff classification. IOSS collects VAT; it does not remove duty.
• Above €150, the shipment is a normal import, with VAT and duty at the border.

Scenario 3: stock in a UK warehouse

Once your stock sits in the UK, every sale to a UK consumer is a domestic sale with UK VAT, and as an overseas business you register from the first one.

• Import VAT. Import VAT is due when your goods arrive. With a UK VAT registration, you can use postponed VAT accounting: you declare and reclaim the import VAT on the same VAT return instead of paying it at the border. A business without a UK establishment also needs someone to handle customs declarations for it.
• Marketplace sales. When an overseas seller sells goods already in the UK through a marketplace, the marketplace accounts for the VAT on the sale. Registering is still usually worth it, so you can reclaim the import VAT.
• An EORI number starting with GB is needed to import.

Scenario 4: stock in an EU warehouse

Holding stock in an EU country, for example with a 3PL in the Netherlands, means:

• A VAT registration in that country, for the import and for sales to customers there.
• Union OSS for the other EU countries. Sales shipped from your warehouse to consumers in other EU countries are taxed at the customer's local rate. The Union One-Stop Shop lets you report all of them on one quarterly return. A business established outside the EU registers for OSS in the country its goods are dispatched from; with stock in several countries, it can choose one of them. Sales to customers in the warehouse country itself go on the local VAT return, not the OSS return.
• A fiscal representative where required. Many EU countries require a business established outside the EU to appoint a local fiscal representative, who is often jointly liable for the VAT. Italy, Spain and Poland require one; Germany and Ireland do not. Check this before you choose a warehouse country.
• Marketplace rules. When a non-EU seller sells goods already in the EU to consumers through a marketplace, the marketplace is generally treated as the supplier for VAT.

What changes with your own UK or EU company

A local company does not make VAT disappear, but it makes the picture much simpler:

• An EU-established company can register for IOSS itself, with no intermediary.
• It does not need a fiscal representative in its own country.
• Below €10,000 a year of cross-border consumer sales within the EU, it can charge its home-country VAT.
• It imports in its own name, so import VAT, the EORI number and customs records sit with your company, not with a broker.

For a brand selling across the UK and the EU, it gives every registration one clear owner. Our UK & EU Launch plan sets this structure up; with Your European Office, we also run it month to month.

The quick map

Moving stock into the UK or the EU? Our logistics team handles imports, EORI and the 3PL in your company's name.

Mistakes we see most often

• Assuming the UK's £90,000 threshold applies to a US business.
• Showing prices without VAT and adding it at checkout. Our free UK & EU Store Check flags this in 48 hours.
• Registering in one EU country and charging that country's rate to customers everywhere.
• Paying import VAT at the border and never reclaiming it, because nobody registered as the importer.
• Scattered records. OSS and IOSS records must be kept for ten years.

Questions

Do US sellers need to register for UK VAT?
Yes, if they sell to UK consumers from stock held in the UK, or sell parcels of £135 or less directly from outside the UK. Businesses without a UK establishment have no registration threshold.

Can I use OSS if I ship from the US?
No. OSS covers goods already inside the EU. Parcels of €150 or less shipped from outside the EU use IOSS instead.

Is IOSS mandatory?
No. Without it, your EU customers pay import VAT and a carrier fee on delivery, which leads to refused parcels.

Do I need a fiscal representative?
It depends on the country. Some require one for every non-EU business, others don't, and a company established in the EU does not need one in its own country.

Sources

• HMRC VAT Registration Manual: non-established taxable persons
• GOV.UK: VAT and overseas goods sold directly to customers in the UK
• GOV.UK: postponed VAT accounting
• HMRC VAT Registration Manual: overseas sellers and online marketplaces
• European Commission: VAT One Stop Shop
• European Commission: VAT rates
• Avalara: EU VAT fiscal representative countries
• Council of the EU: customs duty on small parcels