For UK businesses with cross-border supply, VAT changed substantially post-Brexit and continues evolving. The April 2026 IOSS intermediary changes tighten compliance for low-value EU sales. Postponed VAT Accounting (PVA) shifted import VAT from cash-on-import to deferred-on-VAT-return, reducing cash flow drag. Online marketplaces became "deemed suppliers" in 2021, shifting VAT collection responsibility upstream. The £135 consignment value threshold for e-commerce imports created a two-tier customs regime. Union and Non-Union OSS schemes simplify B2C VAT registration across multiple EU member states. EORI numbers and customs declarations are now mandatory for any UK-EU goods movement.
IOSS: April 2026 intermediary changes
The Import One-Stop Shop (IOSS) is the EU's single-registration VAT mechanism for B2C imports below €150:
- Pre-2026: UK businesses could appoint an EU-based intermediary to operate IOSS.
- April 2026: rules tightened on intermediary qualifications (financial standing, professional indemnity, EU establishment).
- Compliance burden: intermediaries face direct exposure to client VAT errors.
- Cost increase: typical IOSS intermediary fees rose from €500-€1,500/year to €1,500-€3,500/year.
- Alternative: register in each EU member state separately (admin-heavy, suits very low EU sales volume).
- Alternative: sell only via online marketplaces that handle VAT on the seller's behalf.
Some IOSS intermediaries withdrew from the market in early 2026
The tightened qualifications and increased liability caused several smaller intermediary providers to withdraw from the UK market. UK e-commerce businesses with small EU sales volumes have had to either find replacement intermediaries, register directly in each member state, or restrict EU sales below thresholds.
Postponed VAT Accounting vs C79
For UK importers, two methods of recording import VAT:
PVA vs C79 import VAT recording
| Aspect | Postponed VAT Accounting (PVA) | C79 certificate |
|---|---|---|
| Cash flow impact | Zero (output and input recorded simultaneously on return) | Pay import VAT in cash, recover on next return |
| Documentation | Monthly online statement from HMRC | Paper C79 certificate |
| Recovery timing | Same VAT period as supply | Period in which C79 received |
| Suitable for | Most VAT-registered importers | Smaller importers, occasional imports |
PVA was introduced post-Brexit (January 2021) and is now the standard for most VAT-registered UK importers. The cash flow benefit is material for businesses with steady import volumes.
Online marketplaces as deemed suppliers
Since 2021, online marketplaces (Amazon, eBay, Etsy, etc.) are treated as the "deemed supplier" of certain B2C cross-border supplies:
- Marketplace collects VAT on the sale to the consumer.
- Marketplace remits VAT directly to HMRC.
- Underlying seller (the actual goods owner): treats supply to marketplace as zero-rated.
- Compliance burden: shifted from underlying seller to marketplace.
- Applies to: imports below £135 to UK consumers, and EU imports below €150 to EU consumers (via IOSS).
- Out of scope: B2B sales, sales above thresholds (these revert to standard import procedures).
B2B vs B2C international services: place of supply
For services supplied across borders, place of supply determines VAT treatment:
- 1B2B services: place of supply is generally the customer's country. UK supplier to EU business customer: outside UK VAT scope, customer accounts via reverse charge.
- 2B2C services: place of supply is generally the supplier's country. UK supplier to EU consumer: UK VAT applies.
- 3Digital services (downloads, streaming, e-learning): place of supply is the customer's country regardless of B2B/B2C status. UK supplier to EU consumer: EU VAT applies (collected via OSS).
- 4Land-related services (construction, real estate): place of supply is where the land is located.
The Cross-Border VAT Series
We're publishing two detailed pieces per week from this series. Check back shortly.
The £135 consignment threshold
For e-commerce imports into the UK:
- Consignments £135 or less: marketplace charges UK VAT at point of sale (deemed supplier rules).
- Consignments above £135: standard import VAT applies, accounted via PVA or paid at the border.
- B2B sales: outside the deemed supplier rules; standard import procedures apply.
- Threshold tested per consignment, not per item; multiple items in one parcel can collectively exceed.
Union OSS and Non-Union OSS
For UK businesses making B2C sales into the EU:
- Non-Union OSS: UK businesses (third-country sellers) register in any one EU member state and report all EU B2C sales through that single registration.
- Union OSS: for sellers established in the EU; not directly applicable to UK businesses post-Brexit.
- Quarterly OSS returns covering all EU sales.
- VAT charged at destination country rates and remitted to OSS portal.
- Threshold: €10,000 of EU-wide B2C sales for distance selling exemption (below which the seller can use UK rates only); above threshold, OSS or per-country registration required.
EORI numbers and customs declarations
For any UK business moving goods between UK and EU:
- 1EORI number required (unique trader ID for customs).
- 2Application via gov.uk; typically issued within 5 working days.
- 3Customs declarations on every cross-border movement (import or export).
- 4Most businesses use a customs broker or freight forwarder; cost £25-£75 per declaration.
- 5Goods must match the customs declaration; misclassification attracts penalties.
- 6Origin certification: for goods qualifying for EU-UK Free Trade Agreement zero-tariff treatment.
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