Written by ECOMMERCE ACCOUNTANTS

When to Register for UK VAT as a Non-UK Business Selling to UK/EU Customers

If you're an international ecommerce seller (e.g US-based) planning to ship to customers in the UK or EU, or considering using fulfilment centres/warehouses in those regions (such as Amazon FBA UK), it’s essential to understand your VAT obligations before you start. Failing to stay compliant may lead to penalties, goods being held at customs and even suspension of your marketplace accounts. Here’s a practical overview for getting it right from day one.

When Does an International Seller Need to Register for UK VAT?

As a non-UK business, you need to register for VAT in the UK before you start selling if:

You store goods in the UK for sale to UK customers (including via fulfilment centres like Amazon’s FBA program).
You're selling goods directly to UK customers and they’re located in the UK at the point of sale.
You're selling from outside the UK (e.g from the US) to UK customers and the total consignment value is £135 or less. In such a case, you collect VAT at the point of sale and remit it to HMRC.

Since there is no VAT threshold for non-UK businesses that store goods or make sales to UK customers, you must register from the first sale or from the moment your stock enters the UK.

Selling via Amazon UK or any other UK Fulfilment Centres

If you're storing goods in a UK-based warehouse, using Amazon FBA UK fulfillment centres or any other UK-based 3PL:

You must register for UK VAT as soon as your stock lands in a UK warehouse.
Marketplaces such as Amazon and eBay may collect and remit VAT on your behalf for B2C sales under £135, however you still need a VAT number and you still need to file VAT returns.
You must submit quarterly VAT returns.

How to Register for VAT in UK

You can register for VAT online, however many international sellers opt to appoint an agent to handle this on their behalf. This is something we do at Ecommerce Accountants, if you’d like our help, get in touch here.

What Does UK VAT Registration Involve?

Once you have registered, you will need to:

Charge VAT on your sales (for most goods, the UK VAT tax rate is 20%).
File VAT returns even if you have no VAT to pay (this is usually done quarterly).
Pay HMRC the VAT collected on sales (known as output VAT), minus any VAT you can reclaim on imports and/or business expenses (known as input VAT).
Display your VAT number on marketplaces and invoices where required.
Retain accurate digital records of all transactions.
Comply with the Making Tax Digital (MTD) requirements – to this end, you'll need applicable accounting software such as Xero or to use a VAT agent.

Tip: Failure to provide a UK VAT number may lead to Amazon suspending your account or holding payments.

Don’t worry about sounding professional. Sound like you. There are over 1.5 billion websites out there, but your story is what’s going to separate this one from the rest. If you read the words back and don’t hear your own voice in your head, that’s a good sign you still have more work to do.

Be clear, be confident and don’t overthink it. The beauty of your story is that it’s going to continue to evolve and your site can evolve with it. Your goal should be to make it feel right for right now. Later will take care of itself. It always does.

Shipping to the EU from the US or Other Non-EU Countries

We’ve looked at the UK but what about other countries in Europe? For international sellers shipping to EU customers (such as those in Germany or Spain), this depends on the scenario:

a) If shipping from a non-EU country (e.g. US or the UK) directly to EU customers (B2C):

You can use the IOSS scheme when the goods are valued at under €150.
You collect VAT at the point of sale and then remit it through this single EU IOSS registration.
You might need an EU-based intermediary to register for the IOSS scheme.

Tip: If you don’t register for the IOSS scheme under this scenario, your customers would be requested to pay any EU VAT due on the delivery by the courier that you’ve used to deliver the item. This can result in returns and/or negative customer reviews, especially if the customer has not been informed that they may receive an additional customs charge before their item can be delivered to them.

b) If storing goods in an EU warehouse (e.g. Amazon’s fulfillment centres via Pan European FBA):

You must register for VAT locally in each EU country where your stock is held.
You will file local VAT returns, paying the correct VAT based on the customer’s location (e.g. 19% in Germany).

Common Mistakes International Sellers Make

Waiting too long to register for VAT (after sales start) – this results in backdated liabilities, and it can also result in penalties for late registration.
Assuming Amazon handles all VAT on your behalf – they often do not, particularly for orders valued at over £135 and also for any B2B sales (which you may not necessarily be able to predict).
Using spreadsheets or non-MTD-compliant software – this often leads to filing errors and penalties.
Failing to plan for multi-country VAT when using European fulfillment programs and warehouses.

Final Takeaway

If you’re an international seller, expanding into the UK or EU:

VAT registration is usually required before you make your first sale or inventory shipment.
Using UK or EU fulfilment programs tends to trigger VAT obligations immediately (anywhere stock is stored in Europe).
Create a plan for VAT registration, software (that supports Making Tax Digital), and filing VAT returns.
Consider working with a VAT specialist who understands e-commerce and cross-border trade in Europe.

Need help with UK VAT registration or filings?

At Ecommerce Accountants, we help US and international sellers navigate UK VAT registration and filings with ease. If you’d like to work with us, please book a free discovery call here.

ECOMMERCE ACCOUNTANTS X brdg - UK & EU VAT COLLABORATION