TL;DR: EU VAT applies to most goods and services sold to European consumers. Standard VAT rates in 2026 range from 16% in Luxembourg to 27% in Hungary, with an EU average of 21.82%. Since July 2021, the EU-wide distance selling threshold has been set at €10,000. The One-Stop-Shop (OSS) system processed over €33 billion in VAT declarations in 2024, a 26% increase year-on-year. The SME VAT scheme, launched January 1, 2025, sets a €100,000 cross-border threshold for EU-resident small businesses. The EU’s VAT in the Digital Age (ViDA) reform, adopted in March 2025, will bring mandatory e-invoicing and digital reporting for cross-border B2B transactions by July 2030. Key 2026 rate changes include Germany’s permanent 7% reduced rate for restaurants, the Netherlands raising accommodation VAT from 9% to 21%, and Finland lowering its reduced rate to 13.5%. eCommerce sellers need to track customer locations, validate VAT numbers, and file returns through the OSS to stay compliant.
If you sell products or services to customers across Europe, VAT is something you need to understand. Not in a “nice to know” way. In a “your seller account depends on it” way.
We have worked with thousands of eCommerce sellers who handle support tickets, returns, and order management across multiple European marketplaces. One thing comes up again and again: confusion about VAT obligations. And it makes sense. The EU has shared rules on VAT, but each country applies them differently. Layer cross-border eCommerce on top of that, and things get complicated fast.
B2C eCommerce turnover in Europe reached €842 billion in 2024, up 7% from the previous year. The EU VAT compliance gap hit €128 billion in 2023, the latest year for which data is available. Tax authorities across Europe are cracking down, and non-compliant sellers face fines, backdated payments, and even account suspensions.
This guide breaks down everything you need to know about EU VAT for eCommerce in 2026. No jargon overload. No legal speak. Straightforward answers to the questions eCommerce sellers ask most.
What Is VAT and How Does It Work in the EU?
Value Added Tax (VAT) is a consumption tax applied to most goods and services traded in the EU. Businesses collect VAT from customers at the point of sale and remit that tax to the relevant government authority.
Here are the basics:
- VAT is added to the price of goods and services at each stage of the supply chain.
- The end consumer pays the VAT. Businesses collect and report it on the EU’s behalf.
- Any business with a turnover above a certain threshold must register for VAT and charge it on sales.
- Since July 2021, the EU-wide distance selling threshold has been set at €10,000 for cross-border B2C sales.
Every quarter, businesses calculate the VAT they have collected, subtract the VAT they paid on their own business purchases, and send the difference to the tax authority. This ensures VAT is applied neutrally across the supply chain.
For businesses asking “do I need a VAT number to buy from Europe?” the answer depends on whether you are operating as a business or a consumer, and your annual sales volume to EU customers.
Why do EU countries all use the same tax?
When the EU was created, the six founding member states all taxed exports differently. Because taxes were applied at each production stage, it was hard to work out how much of a product’s final price was tax. VAT solved that problem by creating a transparent, neutral tax structure. It prevents EU countries from unfairly subsidizing exports, because the amount of tax rebated at the point of export is clear and trackable.
How Are EU VAT Rates Calculated and What Changed in 2026?
VAT is charged as a percentage of a product’s price. That percentage varies by country. By law, the standard rate must be at least 15%. Reduced rates of 5% or lower apply to specific goods and services.
The EU average standard VAT rate in 2026 is approximately 21.9%. Here are the current rates at the extremes:
- Luxembourg: 16% (lowest in the EU, reduced from 17% in 2025)
- Hungary: 27% (highest in the EU)
Key 2026 VAT rate changes
Several countries adjusted their rates heading into 2026:
- Germany reintroduced the reduced 7% VAT rate for restaurant and catering services, effective January 1, 2026
- The Netherlands raised VAT on accommodation services from 9% to 21%, effective January 1, 2026
- Finland lowered its reduced VAT rate from 14% to 13.5%, effective January 1, 2026
- Lithuania moved several items from the 9% reduced rate to 12%, effective January 1, 2026
- Belgium raised its reduced rate on hotel accommodation, takeaway food, and entertainment from 6% to 12%, effective March 1, 2026
- Czech Republic now applies a single 12% rate to catering services, effective January 1, 2026
What VAT Do I Charge When Selling Between EU Countries?
How VAT applies depends on two factors: what you are selling (goods or services), and who you are selling to (business or consumer). Understanding these rules is critical when businesses ask, “do I charge VAT to EU customers?”
Selling goods B2B (business to business)
You do not charge VAT if your customer has a valid EU VAT number. You still deduct any VAT you paid to make that sale from your quarterly return. If the customer does not have an EU VAT number, you apply your country’s VAT rate to the sale.
Selling goods B2C (business to consumer)
You apply the VAT rate of the customer’s country. You need to either register for VAT in the customer’s country or register for the One-Stop-Shop (OSS). You do not need to do this if your total cross-border sales to other EU countries in that tax year fall below the €10,000 threshold.
Selling services B2B
You typically do not charge VAT. The customer pays VAT at their country’s rate through the reverse charge procedure. You still deduct the VAT you paid to make the sale each quarter.
Selling services B2C
You charge VAT at the rate of your own country for most services. The exceptions are telecoms, broadcasting, and electronic services, which are taxed at the customer’s country’s rate. Since 2025, services streamed or delivered digitally are taxable where the consumer resides.
Buying goods or services for business purposes
You pay VAT at your country’s rate as if you had sold the goods. This amount is usually deductible when you declare your own VAT.
Managing customer inquiries about VAT charges, shipping, and order details across multiple marketplaces becomes easier when your support team has everything in one place. eDesk’s multichannel customer service tools help online retailers centralize messages from Amazon, eBay, Shopify, and dozens of other channels.
How Does the One-Stop-Shop (OSS) Simplify VAT Compliance?
The VAT One-Stop-Shop (OSS) is an EU system that lets businesses register for VAT in one EU country and use that registration to report and pay VAT for all cross-border sales across the EU.
Without the OSS, a seller making B2C sales in 10 EU countries would need to register for VAT in each one. The OSS eliminates that burden, reducing red tape by up to 95% according to the European Commission.
OSS performance in 2024
The numbers tell the story. In 2024, over €33 billion in VAT was declared through the three OSS schemes, representing a 26% increase compared to 2023. The breakdown:
- Union OSS: €24 billion
- Non-Union OSS: €2.8 billion
- Import OSS (IOSS): €6.3 billion (a 62% jump from 2023)
By the end of 2024, over 170,000 businesses had registered for the OSS and IOSS frameworks. That included more than 20,000 new Union OSS registrations in a single year.
How the OSS works
- You register for OSS in your home EU country.
- You charge the customer’s country VAT rate on each sale.
- You submit one quarterly OSS VAT return to your home country.
- Your home country forwards the VAT owed to each EU country where you made sales.
You still need to apply country-specific VAT rates. But you pay all VAT to one authority, which distributes payments on your behalf.
What Is the Import One-Stop-Shop (IOSS) for Non-EU Sellers?
The Import One-Stop-Shop (IOSS) simplifies VAT collection for goods worth up to €150 imported from outside the EU.
Without IOSS, customers pay VAT at the point of import, which creates friction and delays. With IOSS, the seller collects VAT at checkout, and the goods clear customs without additional VAT charges.
IOSS growth and 2026 outlook
The EU’s ViDA reform package, adopted in March 2025, includes measures to encourage wider IOSS adoption. Changes taking effect in phases through 2028 will make non-participation more costly for sellers. The IOSS saw a 62% increase in VAT declared in 2024, reaching €6.3 billion. With ViDA implementation progressing through 2026, registration for IOSS is becoming a business necessity rather than an option.
Non-EU sellers should consider IOSS registration as a competitive advantage. Customers prefer a seamless checkout experience without surprise import charges.
What Is the EU SME VAT Scheme and How Does It Work?
On January 1, 2025, the EU introduced a cross-border VAT scheme for small and medium-sized enterprises (SMEs). Now in its second year, the scheme continues to reduce the compliance burden for small sellers trading across EU borders.
Key details of the SME scheme
- EU-based small businesses with total EU-wide annual turnover below €100,000 are eligible.
- The domestic VAT exemption threshold is set at a maximum of €85,000 per member state.
- Qualifying businesses receive an “EX” suffix VAT identification number from their home country.
- A single quarterly report covers sales across all 27 member states.
- Businesses under the scheme do not charge VAT on eligible sales, but they also lose the right to deduct input VAT on related purchases.
This scheme is only available to EU-established businesses. Non-EU sellers remain excluded.
The SME scheme and the OSS work together. A qualifying small business has the option to use the SME exemption in countries where sales are below the national threshold, while also registering for the OSS Union scheme to handle taxable supplies elsewhere.
What Is ViDA and How Will It Affect eCommerce VAT?
The VAT in the Digital Age (ViDA) reform package was formally adopted by the EU Council on March 11, 2025, and published in the Official Journal on March 25, 2025. This is the largest reform to the EU VAT system in decades, and 2026 is a critical year for implementation as member states transpose the directive into national law by December 31, 2026.
ViDA timeline and key milestones
- April 2025: Member states allowed to mandate domestic e-invoicing without prior EU authorization. (Now in effect.)
- January 2027: Updates to the eCommerce package, expansion of OSS to include electricity, gas, and heating supplies.
- July 2028: Single VAT Registration reforms take effect, including mandatory reverse charge for non-identified suppliers and extension of OSS scope.
- July 2030: Mandatory e-invoicing and digital reporting for cross-border B2B transactions.
- January 2035: All domestic digital reporting systems must align with EU standards.
Several member states are already rolling out domestic e-invoicing mandates ahead of the EU-wide deadline. France begins its first phase for large companies in September 2026. Belgium and Croatia launched mandatory B2B e-invoicing on January 1, 2026. Poland followed on February 1, 2026. For eCommerce sellers, these changes mean digital compliance is no longer a future concern. It is happening now.
Which EU Territories Are Exempt from VAT?
Not all European territories follow standard EU VAT rules. This matters when shipping to customers in these regions.
VAT does NOT apply to:
- The Åland Islands
- The French Overseas Departments
- The territory of Büsingen
- The island of Heligoland
- Mount Athos
- Campione d’Italia
- The Italian waters of Lake Lugano
- Livigno
- The Canary Islands
- Ceuta and Melilla
- The Channel Islands
- Gibraltar
VAT DOES apply to:
- Monaco
- The Isle of Man
- UK bases in Cyprus
If you ship to these territories, check the specific rules that apply. Incorrect VAT treatment on orders destined for exempt territories is a common error that triggers compliance issues.
Do I Pay EU VAT If I Sell from Outside Europe?
Whether VAT applies to your EU sales from a non-member state depends on your customer’s status.
- If your customer has no valid VAT Registration Number (VRN), they are a consumer. You charge VAT.
- If your customer has a valid VRN, they are a business. You do not charge VAT. The customer handles their own VAT through the reverse charge mechanism.
Either way, you need to register for EU VAT, charge it where applicable, keep records, and submit quarterly returns. The OSS and IOSS systems make this process manageable for non-EU sellers.
Validating customer information
You should validate VAT numbers on the EU Commission’s VIES system to prevent fraud. Some buyers submit false numbers to avoid paying tax.
For customer location verification, you need two pieces of evidence from the following:
- The customer’s billing address
- The address of their bank
- The country that issued their credit or debit card
- Their device’s IP address
- Their SIM card number (for mobile purchases)
You must record and keep this information for ten years per customer.
What Records Do I Need to Keep for EU VAT Compliance?
Beyond standard VAT returns, eCommerce sellers shipping into or throughout the EU need to be aware of several additional compliance requirements.
EC Sales Lists (ESLs)
These track B2B sales and stock movement across EU countries. They are filed alongside your VAT return.
European Operator Identifier Number (EORI)
If you ship products into the EU from outside, you need an EORI number. Along with your VRN, this identifies shipments and lets you reclaim VAT paid at customs.
Record retention
All transaction records, customer verification data, and VAT calculations must be kept for a minimum of 10 years.
When your team handles high volumes of customer messages across Amazon, eBay, Shopify, and other platforms, having a central system prevents things from slipping through the cracks. eDesk’s helpdesk for Amazon and eBay sellers gives support teams the context they need to resolve order-related queries fast, including VAT and shipping questions.
What Happens If I Don’t Pay European VAT?
EU enforcement of VAT compliance is intensifying. The European Public Prosecutor’s Office (EPPO) had over 2,666 active fraud-related investigations at the end of 2024, with estimated damages of €24.8 billion. More than half of that amount, over €13 billion, was linked to cross-border VAT fraud.
Consequences of non-compliance include:
- Penalty fines
- Demands for backdated payments
- Loss of your Amazon or eBay seller account
- Formal investigations into your business
Tax authorities across Europe increasingly use technology and cross-border information sharing to identify non-compliant sellers. The ViDA reform will make detection even more efficient through mandatory e-invoicing and real-time digital reporting.
If you sell on Amazon or eBay, maintaining VAT compliance is directly tied to keeping your seller account in good standing.
How eDesk Helps Multichannel Sellers Stay Organized
VAT compliance requires accurate order data, clear communication with customers, and fast response times, especially during audits or when customers question charges.
eDesk connects with over 250 eCommerce platforms and marketplaces, giving support teams a single view of every customer interaction. When a customer asks about VAT on their order, your team has the order details, shipping information, and conversation history right there.
For sellers managing operations across multiple EU countries and marketplaces, eDesk’s international eCommerce customer support features help teams respond in the right language, with the right context, in the timeframe marketplaces demand.
Try eDesk free for 14 days. No credit card needed.
FAQs
Do I need a VAT number to buy from Europe?
If you are buying as a consumer, no. If you are buying as a business and want to avoid being charged VAT by the seller, you need a valid EU VAT number. The seller should validate your number through the EU’s VIES system.
Do I charge VAT to EU customers from outside the EU?
Yes, if your customer is a consumer without a valid VAT number. You charge the VAT rate of their country. If they are a VAT-registered business, the reverse charge mechanism applies, and you do not charge VAT.
What is the EU VAT distance selling threshold?
The EU-wide distance selling threshold is €10,000 per year in total cross-border B2C sales. Below this amount, you charge VAT at your home country’s rate. Above it, you must charge the customer’s country rate and should register for the OSS.
How does the One-Stop-Shop (OSS) work for eCommerce sellers?
The OSS allows you to register for VAT in one EU country and file a single quarterly return covering all your cross-border B2C sales. Your home country’s tax authority distributes the VAT to each country where you made sales. Over 170,000 businesses were registered by the end of 2024.
What is the EU SME VAT scheme?
Since January 1, 2025, EU-based small businesses with total EU-wide turnover below €100,000 are able to sell VAT-exempt in other EU member states, provided sales in each country stay below that country’s domestic threshold (maximum €85,000). This scheme is not available to non-EU businesses.
What is ViDA and when does it take effect?
ViDA (VAT in the Digital Age) is the EU’s reform of its VAT system, adopted in March 2025. Member states must transpose the directive into national law by December 31, 2026. It introduces mandatory e-invoicing for cross-border B2B transactions by July 2030, expands the OSS scope by July 2028, and requires all domestic digital reporting systems to align with EU standards by January 2035. Several countries, including Belgium, Croatia, Poland, and France, are already implementing domestic e-invoicing mandates in 2026.
What are the penalties for not paying EU VAT?
Penalties include fines, backdated tax demands, loss of marketplace seller accounts, and formal business investigations. The EPPO reported over 2,600 active fraud-related investigations at the end of 2024, with estimated damages totaling €24.8 billion.
