EU VAT on Distance Sales: OSS, Thresholds, and the Mistake That Leads to a Fine

André Pimentel · 2026-10-07

€10,000 threshold

In the European Union, distance sales to end consumers in other member countries have a €10,000 annual threshold. This means that if your sales total up to that amount, you can choose to charge VAT from your country of origin. If you exceed it, you must apply the rate of the destination country. It’s crucial to monitor your sales continuously so you don’t exceed this limit without making the necessary adjustment.

Oss regime

The One Stop Shop (OSS) regime simplifies the process of reporting and paying VAT on distance sales. By signing up for OSS, you can report VAT on all your sales through a single portal, regardless of how many countries you sell in. This reduces red tape, since you don’t need to register in every country where you make sales. To sign up for OSS, your business must be registered for VAT in an EU country.

Invoice and receipt for COD

With the Cash on Delivery (COD) payment model, it’s important to issue the correct invoice to the customer. The receipt must reflect the VAT charged, as this is essential for tax compliance. The invoice must include all the required information, such as the seller’s and buyer’s tax identification numbers, a description of the products, the total amount, and the VAT rate applied. Not issuing a proper invoice can lead to tax issues, including fines.

Tax representative

If you don’t have a physical presence in a country where you sell, you may need to appoint a tax representative. This representative will be responsible for making sure you meet your tax obligations in that country, including filing VAT returns. It’s essential to choose a reliable representative who knows the local laws well to avoid legal and tax issues.

What the carrier reports

Carriers play an important role in the distance sales process. They need to report information about shipments, including the total sale amount and the VAT charged. If the carrier doesn’t report this information correctly, you may run into issues with the tax authorities, which could result in fines or audits. So it’s essential to make sure carriers know their reporting obligations and report everything correctly.

Complying with EU VAT rules is complex, but essential to avoid fines and legal issues. What challenges are you currently facing with VAT on your international sales? Share the numbers!