Selling Across EU Borders? Here's How VAT Works
Cross-border e-commerce within the EU has specific VAT rules. OSS, reverse charge, thresholds — here's what you need to know.
Selling across borders within the EU is great for growth, but VAT gets complicated fast. Different countries, different rates, different rules. Here's the practical breakdown.
The One-Stop-Shop (OSS) system
Since July 2021, the EU has the OSS system. Instead of registering for VAT in every EU country where you sell, you register for OSS in your home country and report all EU sales through a single return. The threshold to trigger OSS is €10,000 in annual cross-border B2C sales across all EU countries combined.
B2C vs. B2B — completely different rules
B2C (selling to consumers): Below the €10,000 threshold, you charge your home country's VAT rate. Above it, you charge the destination country's rate and report through OSS.
B2B (selling to businesses): If the buyer has a valid VAT number, you apply the reverse charge mechanism — 0% VAT on your invoice, and the buyer self-assesses VAT in their country.
Which VAT rate to charge?
This depends on the destination country and the product category. Germany has 19% standard / 7% reduced. France has 20% / 5.5%. Belgium has 21% / 6%. Your invoicing tool should handle this automatically if you configure it for OSS.
Marketplace facilitator rules
Important: for some marketplaces, the platform itself is considered the "deemed supplier" for VAT purposes. This means the marketplace charges and remits VAT, and you receive the net amount. Check your marketplace's VAT policy — it varies by platform and product type.
Keep records clean
For cross-border sales, your records need to show: the customer's country, the VAT rate applied, the VAT amount, and whether it was a B2B or B2C sale. Automatic invoicing makes this dramatically easier than doing it by hand.
