Online Service Providers

For businesses providing digital services (such as e-books, software, or online courses) to customers in the UK or the EU, the VAT rules are as follows:

• UK VAT: Non-UK businesses supplying digital services to UK consumers must register for UK VAT. You must charge VAT at the applicable UK rate and submit VAT returns quarterly.

• EU VAT: Non-EU businesses must register for VAT in each EU country where they provide digital services or utilise the One-Stop-Shop (OSS) scheme to simplify VAT reporting across all EU member states. VAT must be charged based on the customer's location and VAT returns should be filed through the OSS portal quarterly.

Physical Goods Sellers

For US businesses selling physical goods, the VAT requirements differ:

• UK VAT: If you are selling low-value goods (valued at £135 or less) to UK consumers, you must charge VAT at the point of sale and remit it to HMRC, even if you don’t have a physical presence in the UK.
  
  For goods valued over £135 import, Import VAT rules apply. Customers will be responsible for paying VAT at the point of importation, unless your business registers as an importer of record and covers the import taxes.

• EU VAT: For low-value consignments of goods (valued at €150 or less) sold to EU consumers, You can use the OSS (One Stop Shop) scheme for VAT reporting if you are VAT registered in any EU country. Alternatively, you can use the IOSS (Import One Stop Shop) scheme but you will need to appoint a local representative.
  
  If your sales exceed the €150 threshold , you can either register for VAT in the destination member state to cover import taxes or your customers will pay import VAT directly to their local customs authorities.