Selling online from Tbilisi, Dubai or Chiang Mai to customers based in France or Germany is technically straightforward. The VAT logistics, however, are far less so. The most common trap: assuming that being resident outside the EU automatically exempts you from all European VAT obligations. That is wrong, and European tax authorities are checking it with increasing frequency.

This guide explains who must collect what, under which scheme, and how to stay compliant without setting up unnecessary structures.

The core principle: VAT follows the customer, not the seller

For VAT purposes, the EU applies the destination principle: it is the place of consumption that determines the applicable VAT, not where the seller is established. If you are resident in Georgia and sell an ebook or a SaaS subscription to a private customer based in Belgium, you are in principle required to collect and remit Belgian VAT (21%).

This principle has been in force since the July 2021 VAT reform, which significantly simplified the system while extending it to sellers not established in the EU. The European Commission’s goal is to end the competitive advantage that non-EU sellers enjoyed by shipping goods without charging VAT.

The official reference documentation is available at ec.europa.eu.

OSS scheme: one declaration for all your B2C sales in the EU

What the OSS scheme is

The OSS (One-Stop Shop) scheme allows a seller to declare and remit VAT on all their B2C sales to EU countries through a single portal, without needing to register in every member state where they have customers.

There are two variants:

  • Union OSS: for businesses established within the EU. Covers B2C sales of goods and services to other member states.
  • Non-Union OSS: for businesses established outside the EU. Covers only services sold to private individuals in the EU (electronic services, telecommunications, broadcasting).

If you are a freelancer or a company based in Georgia, Dubai or Singapore, the Non-Union OSS is the relevant scheme for your digital services.

The 10,000 EUR threshold

Below 10,000 EUR in B2C sales to all EU countries combined in a calendar year (and the previous one), you can apply the VAT rate of your country of establishment. But be careful: this threshold only applies to businesses established in the EU. If you are established outside the EU, this threshold does not protect you: you are subject to VAT rules from the very first euro of digital service sales to a European consumer.

How the OSS works in practice

  1. You register for OSS in a member state of your choice (or your fiscal representative’s country if you are outside the EU).
  2. Each quarter, you file an OSS return summarising your sales by country and the corresponding VAT amounts.
  3. You remit the total VAT to that member state, which then redistributes it to the other member states concerned.

The result: one registration, one quarterly filing, one payment. That is considerably more manageable than registering in 27 countries.

IOSS scheme: for imported goods under 150 EUR

The IOSS (Import One-Stop Shop) scheme targets specifically the sale of physical goods imported into the EU with a value of 150 EUR or less per parcel. This is the typical scheme for dropshipping sellers or e-commerce merchants shipping from warehouses outside the EU (China, the United States, etc.).

Without IOSS, VAT is collected at customs upon import, which creates friction at delivery (clearance fees, delays). With IOSS, VAT is collected at the point of sale, making customs clearance smoother.

The IOSS number is communicated to the carrier, who can present parcels at customs with VAT already settled. If you sell through marketplaces like Amazon or Etsy, these platforms often handle IOSS on your behalf: check the terms of your seller agreement.

For parcels above 150 EUR, IOSS does not apply: customs duties and VAT are collected at import under standard rules.

The official IOSS page from the European Commission details the registration process.

B2B vs B2C: very different rules

The distinction between a sale to a business (B2B) and a sale to a private individual (B2C) is central to VAT. It determines who collects and who remits.

B2C sale: you collect VAT

In a sale to a private individual (B2C), it is the seller who collects VAT at the rate applicable in the customer’s country. There is no reverse charge mechanism on the buyer’s side: the customer pays the VAT-inclusive price, and you remit the VAT to the tax authority.

Intra-EU B2B sale: reverse charge

In a sale to a VAT-registered business in another EU country (B2B), the reverse charge mechanism applies. You invoice without VAT, and it is the buyer who declares the VAT in their own country.

For this mechanism to apply, you must:

  • Obtain your customer’s EU VAT registration number
  • Verify it on the VIES (VAT Information Exchange System)
  • Include on the invoice the legal notice “Reverse charge — Article 194/196 of the VAT Directive”

The OSS scheme does not apply to B2B transactions: it is exclusively designed for B2C.

Digital services: customer’s country rule (B2B and B2C)

For electronically supplied services (SaaS, online courses, software, digital content), VAT is due in the customer’s country, whether they are a business or a private individual. This has been the default rule for digital services since 2015, confirmed and extended in 2021.

Examples of services considered electronically supplied:

  • Software and SaaS subscriptions
  • Ebooks, music, video on demand
  • Online courses
  • Web hosting, domain names
  • Online games

If you provide these services to European private customers from abroad, you must register for the Non-Union OSS.

Concrete example: non-EU resident selling to European customers

The most common profile

You are a freelancer or entrepreneur, resident in Georgia, Dubai or Thailand. You sell online courses, a SaaS subscription or physical products to customers in France, Belgium and Germany. What do you do?

B2C digital service sales: you must register for Non-Union OSS in an EU member state of your choice (Ireland, Estonia and the Netherlands are often chosen for their administrative accessibility). Estonian e-residency can simplify this process if you have an Estonian company.

B2B sales: you invoice without VAT, the customer reverse-charges it themselves. No VAT registration required on your side for these transactions, provided you have verified VAT numbers.

Imported physical goods (≤ 150 EUR): IOSS registration or delegation to the marketplace.

The fiscal representative

If you are established outside the EU and not in a country with an administrative cooperation agreement with the EU, some member states may require the appointment of a fiscal representative on their territory. This representative is jointly liable for the VAT due. Costs range from 500 to 2,000 EUR per year depending on the provider and your transaction volume.

For more detail on international invoicing, read our article on invoicing from abroad.

SaaS and digital products: specific rules

SaaS is treated as an electronically supplied service: VAT is due in the customer’s country (for both private individuals and businesses), unless it is B2B with reverse charge.

Key points for SaaS publishers:

Determining the customer’s country: you must collect two non-contradictory pieces of evidence of the customer’s country of residence (billing address, IP address, country of the payment card, etc.). If the evidence is contradictory, you must apply the VAT rate of the less favourable country or file a manual declaration.

VAT-inclusive pricing in the EU: if you display a price, European consumers must see the VAT-inclusive price. Your pricing display configuration must therefore incorporate VAT based on the detected location.

Reduced rates: some EU countries apply reduced rates to ebooks or educational software. Check the specific rates if your product is likely to qualify.

For the optimal legal structure to handle these obligations, see our guide on starting a company abroad.

Summary table: applicable VAT scheme by scenario

Type of sale Seller based outside EU B2C customer (EU private individual) B2B customer (EU business)
Digital service Outside EU Customer country VAT — Non-Union OSS No VAT — reverse charge
Imported physical goods ≤ 150 EUR Outside EU Customer country VAT — IOSS No VAT — customs duties per regime
Imported physical goods > 150 EUR Outside EU VAT collected at customs on import VAT at customs + customs duties
Non-digital service (consulting, etc.) Outside EU Depends on service type and country No VAT — reverse charge if intra-EU B2B

For non-digital services, the place-of-supply rules vary by type of service. Consult a VAT specialist with international expertise.

The most common pitfalls

Pitfall 1: assuming being outside the EU exempts you from VAT

This is the most widespread mistake. The seller’s country of establishment does not determine the VAT obligation: it is the place of consumption. The moment you sell digital services to European private customers, you have obligations — even from Dubai or Georgia.

Pitfall 2: misreading the OSS threshold (and its non-EU limitations)

The 10,000 EUR threshold is frequently cited, but it only applies to sellers established in the EU. If you are outside the EU, there is no minimum threshold: every B2C digital service sale to a European private customer attracts VAT from the first euro. The French tax authority and service-public.fr clarify these rules for non-established sellers.

Pitfall 3: forgetting VAT on digital B2B services

The B2B reverse charge mechanism is usually well understood, but some entrepreneurs neglect to verify their customers’ VAT numbers and include them on invoices. Without a valid VAT number, you cannot apply the reverse charge: you may end up liable for the VAT yourself.

Pitfall 4: confusing OSS and IOSS

OSS and IOSS are two separate schemes covering different situations. OSS covers services (and certain goods for EU sellers). IOSS covers only imported goods below 150 EUR. Registering for IOSS does not exempt you from an OSS registration if you also sell digital services.

Pitfall 5: neglecting proof documentation

For digital services, you are responsible for proving the customer’s country. In the event of an audit, if you cannot justify the VAT rate applied to each sale, you face back-tax demands with penalties. Systematically document IP address, card country and billing address for every transaction.

Your company structure and OSS access

If you operate through a foreign company (US LLC, UK LTD, Estonian OÜ), OSS access rules depend on your company’s country and your personal residency.

The Estonian OÜ is often cited as an accessible structure for non-EU residents who want to simplify European VAT compliance, particularly through e-residency. It allows direct registration for Union OSS in Estonia. See our article on moving to Estonia to understand the e-residency context.

Our guide on entrepreneurs abroad summarises available structures by residency.

Frequently asked questions

I only sell to businesses (B2B). Do I need to register for VAT in Europe?

Not necessarily for intra-EU B2B sales with reverse charge, provided you have valid VAT numbers for your customers and invoice without VAT with the appropriate wording. But check the situation country by country: some member states require local registration in specific cases (locally delivered goods, particular service locations). An international VAT specialist can confirm your situation in 30 minutes.

My European revenue is small (a few thousand euros per year). Is registering really worth it?

Legally, yes: there is no minimum threshold for non-EU sellers of digital services. Practically, audit risk is proportional to volume, but the obligation still exists. If your European activity is set to grow, setting up compliance early is the better approach. The cost of OSS registration is limited; the cost of a tax back-payment is not.

Does my marketplace (Amazon, Etsy, Shopify) handle VAT on my behalf?

It depends on the marketplace and the type of sale. Amazon (through its FBA programme and EU marketplaces) is treated as the deemed supplier for VAT on goods sold by non-EU third-party sellers in the EU: it collects and remits VAT for you in that case. Etsy takes the same role for non-EU-established sellers. But if you sell directly through your own website, you remain solely responsible. Read each platform’s terms carefully and check whether it treats you as a “deemed supplier” or not.

Do I need to declare the VAT I collect in my country of residence outside the EU?

No. The VAT you collect on behalf of European countries is remitted via OSS or IOSS to the relevant European tax authorities. Your country of residence (Georgia, Dubai, etc.) has nothing to do with this European VAT. The two tax regimes are completely independent.

European VAT for non-resident sellers is a serious subject, but far from unmanageable if you structure it correctly from the start. The OSS scheme was designed precisely to simplify life for sellers active in multiple EU countries. The key: identify your situation (B2B or B2C, goods or services, inside or outside the EU), choose the right registration, and document every sale properly.

For more on your legal and tax structure abroad, see our guides on invoicing from abroad and starting a company abroad.

Find all our guides for expat entrepreneurs: entrepreneur abroad.

The rules described in this guide are in force as of Q3 2026. European VAT legislation changes regularly. For your specific situation, consult an international VAT specialist before making any decisions.