E-Commerce & Cross-Border VAT: Selling Services and Goods Overseas Post-Brexit for UK Businesses
Introduction
Post-Brexit VAT is no longer a simple “charge UK VAT or do not charge VAT” decision. UK sellers now need to separate goods from services, B2B from B2C, and EU customers from non-EU customers before raising an invoice.
The biggest risk is treating every overseas sale the same. HMRC rules, EU import rules, Place of Supply rules, Reverse Charge treatment, and OSS/IOSS schemes all affect what appears on the invoice and how the sale is reported.
For e-commerce stores and SaaS providers, the practical question is this: where is the supply taxed, who collects the VAT, and what evidence proves the treatment? This guide gives a practical framework for post-Brexit cross-border VAT decisions.
Cross-border VAT starts with knowing what is being sold and where it is going.
Selling Goods Overseas
GB Exports Can Usually Be Zero-Rated
Goods exported from Great Britain to customers overseas can often be zero-rated for UK VAT at 0%. That does not mean the sale is ignored. It means the sale is taxable at 0%, and it must still be recorded correctly on the VAT return.
To zero-rate an export, the goods must physically leave the UK. The destination, shipping terms, customer type, and export evidence all matter.
Keep records such as:
Commercial invoices
Courier tracking and delivery confirmation
Customs declarations
Bills of lading or airway bills
Proof of payment
Customer order records
HMRC expects export evidence to be clear and retained. If the proof is missing, HMRC may challenge the 0% treatment and assess UK VAT later.
Low-Value Import Rules Matter
For goods arriving in Great Britain, the UK has a £135 consignment rule for import VAT collection. For goods imported into the EU, the key low-value threshold is €150.
For UK sellers shipping goods to EU consumers, the €150 threshold is central. If the goods are imported into the EU in consignments not exceeding €150, the seller may use the Import One Stop Shop, known as IOSS, to collect VAT at checkout.
IOSS can improve the customer experience because VAT is paid upfront. Without it, the customer may face import VAT, customs handling fees, and delays on delivery.
EU IOSS Setup
IOSS is designed for B2C sales of imported goods into the EU up to €150. A UK business usually needs an EU intermediary unless an exemption applies.
Using IOSS means:
VAT is charged at the customer’s EU country rate
The IOSS number is used in customs data
VAT is reported through a monthly IOSS return
The customer should not be charged import VAT again on delivery
IOSS does not apply to excise goods, higher-value consignments, or B2B sales. It also does not remove the need for accurate product classification and shipping records.
Low-value consignments need the right VAT and customs treatment before dispatch.
Selling Services Abroad
B2B Services Usually Follow the Customer Location
For many B2B services, the Place of Supply is where the business customer belongs. A UK supplier providing services to an EU or non-EU business will often treat the supply as outside the scope of UK VAT.
For EU B2B customers, the Reverse Charge may apply. The UK seller does not charge UK VAT, and the EU customer accounts for VAT in their own country.
Good B2B evidence includes:
Customer VAT number, where relevant
Business name and address
Contract or order details
Invoice wording showing Reverse Charge
Evidence that the customer is acting as a business
A typical invoice might say that the supply is subject to the reverse charge by the customer. The wording should match the facts and your accounting system setup.
B2C Services Need More Care
For B2C services, the default UK position is often that the Place of Supply is where the supplier belongs. That can mean charging UK VAT at the standard rate when a UK business sells a general service to an overseas consumer.
However, many services have special Place of Supply rules. These include digital services, land-related services, admission to events, certain transport services, professional consulting (covered by Schedule 4A Para 16 rules), and services taxed where they are used and enjoyed.
The practical approach is:
Identify the exact service being supplied
Confirm whether the customer is a business or consumer
Check the Place of Supply rule
Decide whether UK VAT, local VAT, or no VAT applies
Keep evidence for the decision
This is where finance teams often find hidden risk. One SaaS subscription, one consultancy project, and one downloadable course can all have different VAT outcomes.
Digital Services and SaaS
EU B2C Digital Sales Are Taxed Where the Customer Lives
Digital services have their own rules. For B2C digital sales to EU customers, VAT is generally due in the customer’s EU member state, not where the UK supplier is based.
This includes many electronically supplied services (ESS), such as:
SaaS subscriptions
App access
Digital downloads
Online memberships
Automated e-learning
Streaming or hosted digital content
There is no EU-wide threshold for UK businesses selling B2C digital services into the EU. VAT can be due from the very first sale.
Non-Union OSS Can Simplify EU Reporting
A UK business selling B2C digital services into several EU countries can register for Non-Union OSS in one EU member state. This allows the business to report EU B2C VAT through a single OSS return rather than registering in every individual customer country.
The seller still charges the specific VAT rate of the customer’s country. OSS is only a reporting simplification, not a unified EU VAT rate.
For SaaS providers, customer location evidence is key. Keep at least two non-conflicting pieces of evidence where possible, such as:
Billing address
IP address
Bank or card issuing country
SIM country, where relevant
Customer self-declaration
B2B SaaS is usually different. If the customer is a genuine business and the Reverse Charge applies, the UK seller may not charge VAT, but must keep proof of the customer's business status.
Digital services and goods can create different VAT obligations across Europe.
Online Marketplaces
Online marketplaces can change who is responsible for collecting and remitting VAT. In some cases, platforms such as Amazon or Etsy may be treated as the "deemed supplier" for VAT purposes.
This commonly arises where:
Goods are imported into the EU in low-value consignments (under €150)
A platform facilitates a B2C sale
A non-EU seller sells goods already located in the EU to EU consumers
Local marketplace rules make the platform responsible for collecting VAT
When the marketplace is the deemed supplier, it collects VAT from the customer at checkout and remits it directly to the tax authority. The seller may instead make a business-to-business supply to the platform for VAT purposes.
Do not assume every platform takes responsibility. Shopify is often a store platform rather than a marketplace, so the merchant remains responsible for VAT collection unless a specific arrangement says otherwise.
Check each platform’s VAT settings and transaction reports regularly. Marketplace VAT treatment should match the accounting entries in Xero, QuickBooks, or any connected app.
Bookkeeping Execution
Set Up Cloud Tax Codes Properly
Good VAT treatment starts with clean bookkeeping. Xero, QuickBooks, and other cloud systems can handle cross-border VAT, but only if the tax codes are mapped to the right transaction types.
Create separate tax codes for common categories, such as:
GB export sales at 0%
EU B2B services outside the scope of UK VAT
EU B2C digital services under OSS
IOSS sales of imported goods up to €150
Marketplace deemed supplier sales
Non-EU consumer sales
Avoid using one generic “no VAT” code for everything overseas. That makes VAT reviews harder and can hide errors in reporting.
Keep Evidence with the Transaction
VAT evidence should sit close to the sale record. If HMRC or an EU tax authority asks questions later, the team should not need to rebuild the story from emails and courier portals.
Useful evidence includes:
Export proofs and tracking details for goods
Customer VAT numbers for B2B services
Reverse Charge invoice wording
Customer location evidence for SaaS
Marketplace VAT reports
IOSS or OSS return records
For digital services, store the evidence used to determine customer location. For goods, retain proof that the goods left the UK and arrived with the overseas customer or carrier.
A regular monthly review helps catch wrong tax codes early. Focus on unusual countries, high-value orders, manual invoices, and marketplace adjustments.
Summary Table
Sale Type | EU B2B | EU B2C | Non-EU B2B | Non-EU B2C |
Goods from GB | Usually zero-rated export with proof. Import VAT may apply in EU. | Usually zero-rated export with proof. IOSS may apply up to €150. | Usually zero-rated export with proof. Local import rules apply. | Usually zero-rated export with proof. Customer may pay import taxes. |
General Services | Often outside UK VAT under Place of Supply. Reverse Charge may apply. | Often UK VAT unless a special rule moves taxation overseas. | Often outside UK VAT under Place of Supply. | Often UK VAT unless a special rule (e.g., Para 16) applies. |
Digital Services & SaaS | Usually Reverse Charge if valid business evidence is held. | VAT due where the customer lives. Non-Union OSS may be used. | Usually outside UK VAT if customer is a business. | Check local rules. UK VAT position depends on Place of Supply. |
Marketplace Sales | Platform rules may alter reporting. Check deemed supplier treatment. | Marketplace may collect VAT in some cases. Check reports. | Platform rules and local import rules apply. | Seller often needs to check import and platform obligations. |
Well-kept VAT evidence makes cross-border reporting easier to defend.
Conclusion and CTA
Cross-border VAT after Brexit is manageable when each sale is classified properly. Start with the basics: goods or services, B2B or B2C, EU or non-EU, then apply the correct VAT rule and keep the evidence.
For goods, focus on export zero-rating, proof of export, IOSS, and marketplace rules. For services and SaaS, focus on Place of Supply, Reverse Charge, customer location, and OSS reporting.
Red Parrot Accounting Limited supports UK e-commerce sellers, SaaS providers, and finance teams with practical VAT advice, bookkeeping setup, and international sales reporting. If you need Swindon and London accountants who understand post-Brexit VAT, contact us today or get in touch with our team to review your cross-border systems before accounting errors become expensive.
Disclaimer: This article is for general guidance only and does not constitute formal tax or accounting advice. VAT legislation, exchange rates, and international trade agreements are subject to change. Complex, high-value, or ambiguous cross-border transactions should always be reviewed by a qualified accountant or tax adviser.
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