Work out the VAT on online sales to customers abroad

Your UK VAT on an online sale abroad depends on two things: whether you are selling goods or a service, and whether the customer is a business or a consumer. Whatever UK VAT you charge, the sale can also create VAT or import charges in the customer's country.

Sell goods to customers abroad

Goods you send out of the UK to a customer abroad are zero-rated exports when the conditions for zero-rating are met, whether the customer is a business or a consumer.

You cannot zero-rate a sale to a customer established in the UK who exports the goods themselves.

If you post goods, a certificate of posting or the Post Office's proof of shipment showing the overseas address is evidence. If you use a courier, its invoice and tracking record for each consignment normally is. An untracked service makes it hard to prove an individual export.

The goods are exported either by you or an agent you appoint (a direct export), or by your overseas customer, who collects them from you (an indirect export). An indirect export needs stronger evidence, because your customer's carrier holds the paperwork. Agree before you release the goods how your customer will send you the proof, and write that into the sales contract. If it does not arrive, you become liable for the VAT.

Customers abroad may owe import VAT, customs duty or fees when the goods arrive. Check the destination country's rules, and tell customers who pays before they buy. To collect EU VAT at checkout on consignments worth €150 or less, register for the EU's Import One Stop Shop (IOSS). A business with no EU establishment must appoint an EU-established intermediary to register, unless it is established in a country that has a VAT mutual assistance agreement with the EU.

Sell services to customers abroad

When the place of supply is outside the UK, you do not charge UK VAT, but you include the sale in box 6 of your VAT return. You may have to register for VAT, or its local equivalent, in the customer's country, so check that country's rules.

To treat a customer as a business, get its VAT registration number. If it cannot give you one, you can accept other commercial evidence of what the customer does, such as certificates from its tax authority. Keep the evidence with your VAT records.

Sell digital services to consumers abroad

If you use a payment service provider, ask for the customer's billing address or telephone number at checkout, and get the provider's notification of the country on its records. If the two match, you have your two pieces of evidence. If they do not, ask the customer to resolve the difference.

If you register for the EU's non-Union One Stop Shop scheme, you register in any one EU member state, send a return each quarter and pay by the end of the month after the quarter ends. Keep your OSS records for 10 years from the end of the year of the transaction.