Cross-border e-commerce VAT is one of the most expensive things to get wrong. We see sellers under-collecting tax for two years, then receiving a six-figure assessment from a foreign tax authority. We also see sellers over-collecting, eroding margin on Amazon listings that are already razor-thin. Here is how the rules sit in 2026, and where the practical pitfalls lie.
The UK seller, UK customer baseline
Selling to UK consumers from UK stock is straightforward. You register for UK VAT once taxable turnover crosses GBP 90,000, charge 20% (or 5% / 0% where applicable), and submit returns under Making Tax Digital. The complication starts when stock or customers cross a border.
Selling into the EU from the UK
Post-Brexit, the UK is a third country to the EU. There are two routes for sellers shipping consumer goods into the EU.
- Goods under EUR 150: import VAT can be collected at the point of sale using the Import One-Stop Shop (IOSS). One EU VAT registration covers all 27 member states for B2C consignments under EUR 150.
- Goods over EUR 150: customer pays import VAT and duty on receipt, which creates friction and refusal rates. Many sellers use a Delivered Duty Paid (DDP) model with a fiscal representative in one EU member state, supported by the One-Stop Shop (OSS) for intra-EU distance sales.
The marketplace deeming rules
For sales through Amazon, eBay, Etsy, and similar platforms, the marketplace is often deemed the supplier for VAT purposes. The seller invoices the marketplace at 0%, and the marketplace charges and accounts for VAT to the end customer. This applies to:
- Goods imported into the UK in consignments under GBP 135.
- Goods located in the UK or EU sold by an overseas seller.
- Goods imported into the EU under EUR 150 through IOSS-enabled marketplaces.
UK sellers shipping from UK stock to UK customers via Amazon retain VAT responsibility themselves. The deeming rules do not apply.
Pan-EU FBA: stock movement triggers VAT registration
If you opt into Amazon's Pan-EU FBA programme, Amazon moves stock between EU fulfilment centres. Each country you store stock in triggers a VAT registration obligation. A UK seller using Pan-EU FBA across Germany, France, Italy, Spain, Poland, and the Czech Republic needs six EU VAT registrations plus their UK one. OSS does not eliminate this: OSS covers distance sales but does not cover domestic supplies from local stock.
Selling into the US
The US has no federal VAT, but most states impose sales tax. Economic nexus thresholds (commonly USD 100,000 or 200 transactions) determine when a UK seller must register and collect. Marketplaces like Amazon and eBay collect and remit on the seller's behalf in marketplace facilitator states, which covers most of the country, but direct Shopify sales do not benefit from this.
Inventory accounting and margin truth
E-commerce sellers often run on platform reports that hide real margin. Amazon settlement statements bundle 20+ fee types. Returns, refunds, and FBA storage fees lag the original sale by months. We rebuild a true Cost of Goods Sold model that ties stock receipts, landed cost (including duty and freight), platform fees, and refunds to revenue at the SKU level. Our e-commerce bookkeeping team uses A2X or Link My Books to feed clean numbers into Xero.
The four common errors we fix
- Treating Amazon reserve as income rather than a held balance.
- Missing the marketplace deeming rules and double-charging VAT.
- Storing stock in an EU country without registering there.
- Ignoring IOSS scheme rules and overpaying import VAT on every consignment.
How we work with sellers
We support sellers from GBP 200,000 to GBP 25m annual revenue. We coordinate UK VAT, EU OSS and IOSS, country-specific registrations, and US sales tax through partner firms. Our VAT services include compliance, advisory, and recovery work. Book a session or explore our e-commerce sector page.