Distance selling

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Distance selling
  • When to register in another EU member state
  • Registering for UK VAT under the distance selling regulations
  • EU distance selling thresholds

Distance selling occurs when a VAT registered EU supplier sells ‘delivered goods’ to a private customer or organisation that is not VAT registered in another EU member state. The customer must purchase delivered goods from the overseas EU supplier in order to come within the scope of the rules explained below. These rules only apply to deliveries within the EU and were introduced to prevent distortion of competition. This could occur if suppliers established themselves in lower VAT rate jurisdictions in order to obtain a competitive advantage over a local supplier selling the same goods to local customers. Under the distance selling rules, an overseas supplier is required to VAT register in the EU member state where the goods are delivered once a specified trading threshold has been exceeded in that country.

VATSM3710; De Voil Indirect Tax Service V2.171 (subscription sensitive); VATA 1994, Sch 2; 2006/112/EC , Article 34

One example of a business sector that often comes within the scope of the distance selling rules are businesses selling publications overseas or goods sold via the internet. Frequently, publishers circulate their books, newspapers or magazines outside the UK either to other European or worldwide distributors, or to individual subscription holders. Under the distance selling regulations, if the supplier is responsible for the delivery of goods to a person who is not a taxable person in another EU member state, such as a private individual subscribing to a UK magazine in another EU member state, they may need to register for VAT if they exceed the threshold mentioned below.

Please note that if the business makes any distance sales of excise goods to another EU member state then it will be required to register and account for VAT in that EU member state regardless of the actual values involved.

When to register in another EU member state

Each EU member state has

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