Distance selling thresholds have been scrapped from 1 January 2021 as part of new Brexit VAT regulations. For most businesses, they have now been replaced with One Stop Shop (OSS) VAT.
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 that sell digital products such as eBooks and Courses. These businesses 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.