Selling Online: An Introduction to Marketplace VAT

In short: Marketplace VAT is the VAT that applies when you sell online through platforms. Where VAT is due depends on where your business, goods and customers are. In the EU and UK, marketplaces are often deemed suppliers that collect VAT themselves, for example on imported goods worth up to €150 (EU) or £135 (UK).

Update (October 2026): The core marketplace rules have not changed. In the EU, platforms are deemed suppliers under Article 14a of the VAT Directive, in force since 1 July 2021. In the UK, marketplaces have been liable for VAT on these sales since 11pm on 31 December 2020, when the Brexit transition period ended. The EU’s VAT in the Digital Age (ViDA) package entered into force on 14 April 2025. Its new platform rules start on 1 July 2028 and cover short-term accommodation and road passenger transport only. The proposed extension to all intra-EU sales of goods was not adopted.

Online sales are growing fast, and marketplace sellers need to understand VAT to handle international e-commerce. Countries around the world set different rules and rates for VAT, so staying informed and compliant can be a challenge.

This guide explains e-commerce VAT for online sellers. It covers what VAT is, how it works, and what you need to know so your business can thrive in a global marketplace.

What is VAT?

Value-Added Tax (VAT) is a consumption tax charged whenever value is added at each stage of the supply chain, from production to the point of sale. The VAT paid is on the cost of the product, minus the costs of materials in the product that have already been taxed.

Unlike sales tax, which is only charged at the final sale to consumers, VAT is collected at every step of the supply chain. Businesses charge and collect VAT on behalf of the government. They pay VAT on their purchases, charge VAT on their sales, and pay the difference to the government.

How does VAT work for online sellers?

For online marketplace sellers, VAT depends on where your business is located, where you sell, and where your customers are based. Here are some key points:

How do your business and customer locations affect VAT?

Selling within your own country: You must follow the local VAT rules and charge your customers the applicable rate.

Selling to other countries within the EU: If you're based in the EU and sell to customers in other EU countries, the distance selling threshold is €10,000. Once you pass it, you must follow the VAT rules of your customers' countries.

Selling outside the EU: You need to know the VAT obligations in your customer's country. Many countries now require foreign online sellers to register for VAT and charge it at the point of sale.

When do you need to register for VAT?

You may need to register for VAT depending on your annual revenue and where you sell. Registering means getting a VAT number, charging VAT on your sales, and filing VAT returns regularly. Check the registration thresholds and requirements in each country where you do business.

How does VAT apply to digital services?

Selling digital services brings extra VAT considerations. Many countries have specific VAT rules for digital goods and services. They often require foreign marketplace sellers to register for VAT regardless of sales volume.

Who pays VAT when you sell through Amazon or another marketplace?

The marketplace pays the VAT only in specific cases set by law. These depend on where the goods are, where you are established and who buys. In every other case, you as the seller charge and pay the VAT.

• EU, imported goods up to €150: For a distance sale of goods imported into the EU in a consignment worth €150 or less, the marketplace is the deemed supplier. This applies whether the seller is inside or outside the EU. Marketplaces can declare this VAT through the Import One-Stop Shop (IOSS). Source: Article 14a(1) EU VAT Directive; Irish Revenue deemed supplier guidance.
• EU, goods already in the EU, non-EU seller: When a seller established outside the EU sells goods already in the EU to a consumer, the marketplace is the deemed supplier. No value limit applies. Source: Article 14a(2) EU VAT Directive.
• EU, goods already in the EU, EU-established seller: The marketplace is not the deemed supplier. The seller charges VAT and can report cross-border consumer sales through the One-Stop Shop (OSS). Source: Irish Revenue deemed supplier guidance.
• EU, sales to VAT-registered businesses: For goods already in the EU, Article 14a covers only sales to consumers and other non-taxable buyers. The seller deals with VAT on B2B sales. Source: Article 14a(2) EU VAT Directive.
• UK, goods outside the UK up to £135: For consignments of £135 or less sold to UK consumers, the marketplace is liable for the VAT. Source: HMRC online marketplaces guidance.
• UK, goods in the UK, overseas seller: The marketplace is liable for VAT on goods of any value in the UK at the point of sale. The seller makes a zero-rated supply to the marketplace. Source: HMRC online marketplaces guidance.
• UK, business buyer gives a UK VAT number: The marketplace does not charge VAT. For consignments of £135 or less, the buyer accounts for it. For goods in the UK, the seller stays liable. Source: HMRC online marketplaces guidance.
• UK, UK-established seller: The marketplace rules cover sellers not established in the UK. A UK-established seller accounts for VAT on its own marketplace sales. Source: HMRC online marketplaces guidance.

What are the EU VAT rules for online marketplaces?

Under EU VAT rules, online marketplaces that facilitate certain sales become deemed suppliers and must collect the VAT. The EU has specific rules for marketplaces that help facilitate the sale of certain goods and services. These rules focus on how marketplaces collect VAT on transactions. Here are the key points:

When does a marketplace facilitate a sale?

A marketplace facilitates a sale, and becomes a deemed supplier responsible for e-commerce VAT collection, when it meets any of these criteria:

• Directly or indirectly setting the terms of supply
• Involvement in authorizing payment transactions
• Participation in the delivery process of the products

When does a marketplace become a deemed supplier?

A marketplace becomes a deemed supplier, and must collect VAT, if it facilitates a B2C sale of the following:

• Digital services
• Goods worth up to €150 imported from outside the EU
• Goods, irrespective of their value, owned by sellers outside the EU but located within the EU at the time of sale

What does the seller still do when the marketplace is the deemed supplier?

Your sale to the marketplace becomes a separate supply. The EU treats it as exempt, with the right to deduct input VAT. You still need to:

• Handle sales the rule does not cover: These include B2B sales and, for EU-established sellers, sales of goods already in the EU.
• Give accurate data: A marketplace is not liable for VAT shortfalls caused by wrong seller information it could not reasonably have known was wrong. Source: Irish Revenue deemed supplier guidance.

How is the deemed supplier rule expanding?

On December 8, 2022, the European Commission proposed significant reforms under the VAT in the Digital Age (ViDA) initiative. The ViDA package was adopted on March 11, 2025.

ViDA extends the deemed supplier rule to platforms in the short-term accommodation rental and passenger transport sectors, from July 1, 2028. These platforms must collect and remit VAT on facilitated transactions where the underlying seller doesn't have to charge VAT, such as consumers or small businesses.

This rule does not apply when transactions are carried out by VAT-registered businesses that have given their VAT identification numbers to the platform.

Under the final text, the provider must give the platform its VAT identification number and declare that it will charge any VAT due. Member States may also exclude short-term accommodation supplied under the small business scheme. Source: Article 28a, Directive (EU) 2025/516.

For e-commerce platforms, the original ViDA proposal also aimed to widen the deemed supplier principle. It previously applied only to B2C sales of goods in the EU by non-EU sellers. The proposal would have covered all intra-EU supplies of goods, irrespective of the buyer's status or the seller's location.

This extension was not adopted. The final ViDA Directive (EU) 2025/516 keeps Article 14a limited to imports up to €150 and to sales by non-EU sellers to non-business buyers. Instead, the Commission must report on the rule by 1 July 2027 and may propose a further extension.

What are the key ViDA dates for marketplaces and sellers?

• 11 March 2025: The Council adopted the ViDA package. Source: European Commission ViDA page.
• 14 April 2025: Directive (EU) 2025/516 entered into force. Source: European Commission ViDA page.
• 1 January 2027: The first single VAT registration changes apply, including OSS and IOSS clarifications. Source: European Commission ViDA page.
• 1 July 2027: The Commission’s report on the Article 14a deemed supplier rule for goods is due. Source: Directive (EU) 2025/516.
• 1 July 2028: Short-term accommodation and road passenger transport platforms become deemed suppliers. Source: European Commission ViDA page.
• 1 July 2030: Digital reporting starts for cross-border B2B transactions. Source: European Commission ViDA page.

What are the UK VAT rules for online marketplaces?

In certain cases, UK online marketplaces are treated as the suppliers of goods sold through their platforms, so they must handle the VAT. These marketplaces may also share liability for the VAT obligations of sellers who fail to comply.

UK VAT rules for sales through online marketplaces are complex. They depend on where the goods are, where the seller is based, and the buyer's VAT status.

How is VAT handled on goods outside the UK?

Sometimes a UK customer buys goods worth £135 or less that are outside the UK at the time of sale. In that case, the seller is treated as supplying the online marketplace, not the customer directly. This supply is not made within the UK, so it falls outside UK VAT rules.

The next sale is treated as a deemed supply by the online marketplace. How VAT applies depends on whether the customer is VAT-registered. For VAT-registered customers, the marketplace doesn't add VAT. Instead, the customer accounts for VAT themselves, as if they were both the supplier and the recipient.

For customers without a VAT registration, the marketplace makes the sale and applies the relevant VAT rate.

How is VAT handled on goods inside the UK?

For goods located in the UK at the time of sale, the value of the goods doesn't affect the VAT treatment.

For sales to VAT-registered customers, the seller must also be VAT-registered and account for UK VAT at the relevant rate.

A sale from an overseas seller to a non-VAT-registered customer is treated as a zero-rated supply from the seller to the marketplace. The marketplace then handles VAT as needed at the point of sale.

The overseas seller is still responsible for any import VAT and customs duties when the goods enter the UK.

What must overseas sellers still do in the UK?

Overseas sellers keep some UK obligations even when the marketplace accounts for the VAT:

• Import VAT and duty: You remain liable for import VAT and Customs Duty when your goods enter the UK.
• VAT registration: If you only make zero-rated deemed supplies to marketplaces, you can register for UK VAT. Registration lets you reclaim import VAT under the normal rules.
• Direct sales: If you sell goods held in the UK directly to customers, you must register and account for VAT on those sales.
• B2B sales: You stay liable for VAT on goods in the UK sold to buyers who give a UK VAT number.

Source: HMRC guidance on overseas goods sold through online marketplaces and sold directly to UK customers.

How can you manage marketplace VAT?

Here are a few tips to help you stay on top of your marketplace VAT obligations as an online seller:

• Stay informed: VAT rules can change, so keep up to date with the laws in the countries where you sell.
• Use VAT automation tools: Several platforms and VAT software solutions can help you calculate, collect, and remit VAT automatically.
• Consult with experts: VAT rules are complex, so advice from a tax professional can be invaluable.

Conclusion

Managing VAT is a critical part of running a successful online marketplace business. Learn the basics of VAT and how it applies to your online sales. Then use strategies to manage it well, so your business runs smoothly and stays compliant with international tax laws.

Do you need help with your VAT compliance? Book a free call with one of our VAT experts to find bespoke solutions for your business, optimize your VAT costs, and reach millions of new potential customers with our automated VAT solutions.

How Taxually handles this

Taxually’s CrossTax handles VAT registration, VAT, OSS and IOSS returns and fiscal representation in the countries you sell into, and checks your sales data against 250+ validation rules before each filing. OneTax then pays every tax authority with one bulk payment in your chosen currency.

Related guides

• 9 Tips for Moving Your Brick-and-Mortar Store Online
• 11 Ecommerce Experts You Should Be Following on X
• Boost Your Sales: 11 Niche Online Marketplaces to Sell On