Selling online overseas has never been easier – or more exposed to tax risk. UK ecommerce businesses can now reach customers across the EU and US from day one, but each region brings its own VAT and sales-tax rules. Get those wrong and you risk double taxation, delayed parcels, platform penalties or unwelcome enquiries from overseas tax authorities.
The opportunity is still significant. Official figures show that online sales made up 28.0% of all retail sales in Great Britain in September 2025, up from 27.8% in August (ONS, 2025). That share has been edging up again, which means more UK businesses are selling online overseas and falling within overseas VAT and sales-tax systems.
In this article, we focus on selling online overseas into the EU and US – how the EU Import One Stop Shop (IOSS) works, how US sales-tax thresholds apply, and what practical steps you can take to stay compliant while protecting your margins.
Understanding EU VAT when selling online overseas
For most UK ecommerce businesses, the starting point is UK VAT. Exports of goods from Great Britain are usually zero-rated for UK VAT if you meet the conditions and keep proper export evidence (HMRC, VAT Notice 703). That does not mean the sale is VAT-free overall – it means EU import VAT is due where the customer receives the goods.
If you are selling online overseas to EU consumers from stock held in Great Britain, three questions matter:
- Where are the goods at the point of sale: If they are in Great Britain, the sale is normally a UK export and EU import VAT arises at the border.
- Who is the importer of record: If the customer is importer, they may face VAT and handling fees on delivery. If you are importer, you may need local VAT registration.
- Are you trading through a marketplace: Large platforms can be treated as the deemed supplier for low-value consignments. That changes which party accounts for VAT and what records you must keep.
When you are selling online overseas directly from your own website, without a marketplace, you must decide whether to let customers pay import VAT on delivery or to handle VAT yourself using IOSS for low-value consignments.
EU IOSS – when registration helps and when it does not
The Import One Stop Shop is designed for businesses outside the EU that sell goods to non-VAT registered EU consumers, where each consignment is valued at no more than €150. The EU sets this limit in euros – for UK sellers it broadly equates to around £135, although the exact sterling value will vary with exchange rates. By registering for IOSS, you charge destination-country VAT at checkout, report those sales in a single monthly IOSS return and the goods move through customs with fewer surprises for the customer.
For UK businesses selling online overseas, IOSS can help when:
- Order values are mostly low: Many EU consumer orders fall below the €150/£135 consignment limit.
- You sell under your own brand: Customers expect a smooth checkout, not unexpected VAT bills on delivery.
- You ship from Great Britain to multiple EU countries: A single IOSS registration can cover all EU consumer destinations.
However, IOSS is not a complete solution:
- High-value orders: Consignments above €150 cannot be reported through IOSS. Standard import VAT and any customs duties apply, either for you or your customer.
- Stock held inside the EU: If you store inventory in an EU warehouse or use an EU fulfilment centre, you are likely to need local VAT registrations and perhaps OSS (the EU’s One Stop Shop) instead.
- Upcoming changes: EU policymakers have agreed to remove the current €150 customs duty relief threshold from 2026 and are progressing reforms that will change how IOSS applies to higher-value consignments.
A simple example:
- A UK fashion brand is selling online overseas to EU customers. Most orders are around €80. Using IOSS, it charges local VAT at checkout and files one IOSS return each month. Customers receive parcels without extra VAT bills and the brand can price with confidence. For occasional €300 orders, it treats those separately and lets the import VAT be handled at the border or via a local VAT registration, depending on the shipping terms.
US sales tax thresholds – avoiding surprise registrations
The US does not have VAT. Instead, there is a patchwork of state-level sales taxes. Historically you only had to collect sales tax if you had a physical presence in a state. Since the 2018 Wayfair decision, most states also apply “economic nexus” rules.
When you are selling online overseas into the US:
- Economic nexus: In many states you must register and collect sales tax once you exceed a threshold, often around $100,000 of sales or 200 transactions in a 12-month period, although some states use higher thresholds such as $500,000.
- Different rules by state: Thresholds, counting methods and exemptions vary. Some states have no sales tax at all.
- Marketplaces: Large platforms may collect and remit sales tax on marketplace sales, but you remain responsible for your own website and for keeping adequate records of total sales by state.
For a UK ecommerce business selling online overseas, the risk is gradual and easy to miss. You may start with a handful of US orders and then, over a couple of strong quarters, find that you have passed a state threshold without realising. At that point, you may owe backdated sales tax, interest and penalties.
Practical steps include:
- Sales tracking by state: Ensure your ecommerce platform or finance system reports revenue and transaction counts per US state.
- Threshold monitoring: Use software or a manual checklist to review where you are against each state’s threshold at least quarterly.
- Registration and filings: Once you cross a threshold, act quickly – register in that state, collect sales tax on new orders and set up regular returns.
- Budget update: Although this article focuses on UK businesses selling online overseas, it is worth noting that the UK has now confirmed it will remove the current customs duty relief for low-value imports (goods worth £135 or less) by March 2029, with a consultation open on the detailed design. This will not affect the zero rating of UK exports, but it will matter if you also import low-value stock direct to UK consumers.
Marketplaces, platforms and record-keeping
Many businesses selling online overseas use marketplaces such as Amazon, eBay or specialist platforms. These can simplify compliance but they do not remove your responsibilities entirely.
For EU sales, marketplaces can be treated as the deemed supplier for low-value consignments, handling IOSS and VAT reporting on their deemed sales. You still need to:
- Understand who is the supplier: Check whether the marketplace is treated as the supplier or whether you remain responsible for VAT.
- Check IOSS usage: Confirm whether the platform is using IOSS on your behalf, and for which transactions.
- Keep your own records: Retain order-level data, VAT charged, IOSS identification numbers where relevant and evidence of exports for zero-rated UK supplies.
Good records matter. Exports of UK goods have been under pressure, with total goods exports falling by 3.3% in August 2025 compared with July and exports to the EU down 5.3% over the month. Tax authorities are keen to protect revenue as trade patterns shift towards ecommerce.
For US sales, detailed records of where customers are based and how much tax you have collected by state are essential if you are selling online overseas at any scale. If you are ever audited, being able to show clean, reconciled figures may be the difference between a short enquiry and an expensive dispute.
If your finance team is stretched, this is an area where we can help you design practical systems, including cloud accounting, integrated sales reports and periodic checks.
Practical next steps when selling online overseas
Selling online overseas can be a powerful growth strategy, but the tax rules are not something to leave until year-end. Online sales already account for around 28% of UK retail sales, and regulators are tightening cross-border VAT and customs arrangements as volumes rise.
If you are planning to expand your overseas ecommerce activity, we suggest:
- Map your current position: Identify where your customers are, where stock is held and whether you already have VAT or sales-tax registrations overseas.
- Review shipping and pricing: Decide when you will use IOSS for EU sales, how you will handle orders above €150 and whether you want customers or your business to be the importer of record.
- Set up proper data and reporting: Ensure your systems can report EU sales by country and US sales by state, with consignment values and order counts.
- Agree a review cycle: Build regular checks into your compliance calendar so that selling online overseas is monitored alongside UK VAT, corporation tax and statutory accounts.
The risks of getting this wrong include delayed deliveries, unhappy customers, double taxation and retrospective overseas tax claims. The benefit of doing it properly is steady, sustainable growth in overseas markets with fewer surprises for cashflow and profit.
If you are selling online overseas, or considering it, it is worth taking professional advice before sales volumes take off. We can help you review your current EU and US exposure, set up practical systems and work with your ecommerce and logistics partners to make sure tax does not hold back your international growth. To discuss your plans for selling online overseas, please get in touch with us.