Who is Affected by Distance Selling Rules?

Distance Selling Threshold rules affect e-commerce businesses that sell goods over the internet, TV or mail order to consumers (not businesses) in countries in the EU.

It does not affect digital businesses who sell digital products such as eBooks and Courses.

These business will need to follow the rules set out under VAT MOSS.

What is the Distance Selling Threshold?

Each country has a distance selling threshold which when breached, require the business to register for VAT in their country, rather than using the VAT rules of the UK.

What are the Distance Selling Thresholds?

Here are some four Distance Selling Thresholds:

Distance Selling Thresholds
Germany €       10,000
Italy €       35,000
Spain €       35,000
France €       35,000

Get a Full List of Distance Selling Thresholds HERE

The rules of Distance Selling apply whether you are UK VAT registered or not.

If You Are UK VAT Registered But Below the Distance Selling Thresholds

You should charge 20% on all your sales to EU consumers and report this as part of your UK VAT return.

If you Are UK VAT Registered and Have Crossed the Distance Selling Thresholds

You must register and report for VAT in each of the countries you have crossed the threshold for and add that countries rate of VAT to each of the sales, not the UK rate as before.

If You are Below UK VAT Registration Threshold and the Distance Selling Thresholds

Do nothing but monitor your sales and the countries which you are selling to.

If your total turnover for all countries crosses the threshold, currently £85,000, then you must register for UK VAT. 

You must account for UK VAT on all your sales on your UK VAT return, until the point they cross distance selling thresholds. At this point you will include them on the EU VAT returns.

Updated 15 April 2019

Anita

Anita is a Chartered Accountant with over a decade of experience taking self employed business owners from financially confused to business savvy.
She is the creator of the ‘Go Self Employed’ website, which her corner on the internet where she makes self employment less terrifying.
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