EU VAT on Digital Services from the UK: 2026 Guide

2 min read

Table of Contents

Which services are “digital”?
B2C place of supply
Using the non-Union OSS
How to establish customer location
B2B digital services
Online marketplaces
VAT rates
Invoices and records
UK VAT return
Example
Common mistakes
Official guidance

A UK business selling digital services to EU consumers normally charges VAT in the consumer’s EU country. It can register in each member state or use the EU’s non-Union One Stop Shop (OSS) to report qualifying business-to-consumer supplies through one registration.

Which services are “digital”?

Electronically supplied services are delivered over the internet with minimal human intervention. Examples include:

downloaded software, apps, music, films and games;
automated online courses and recorded content;
website hosting and cloud storage;
e-books, digital images and subscription databases;
automated software-as-a-service products.

Live teaching, bespoke consultancy and services involving substantial human input may follow different place-of-supply rules even when delivered online.

B2C place of supply

For digital services supplied to a private consumer, VAT is generally due where that consumer belongs. A UK supplier has no EU-wide micro-business threshold after Brexit; even low-value qualifying EU consumer sales can create an EU VAT obligation.

Using the non-Union OSS

A non-EU business can choose one EU member state of identification, submit a quarterly OSS return and pay VAT for qualifying B2C services across participating member states. It charges each customer’s local rate and keeps country-level records.

OSS is a simplification, not a VAT exemption. Domestic supplies, some marketplace transactions and services outside the scheme may require separate registrations.

How to establish customer location

Normally retain two non-conflicting pieces of evidence, such as:

billing address;
IP address or geolocation;
bank or payment-provider location;
SIM card or telephone country code;
fixed landline location.

Presumptions apply to certain locations and low-value circumstances. Investigate conflicting evidence and document the conclusion.

B2B digital services

Services to an EU business are usually treated under the general B2B rule, with the customer accounting for VAT through the reverse charge. Validate the customer’s status and VAT number and include the correct invoice wording. A VAT number is strong evidence but not the only possible evidence of business status.

Online marketplaces

A platform can be treated as buying and reselling the digital service for VAT where it controls key elements of the supply. Review the contract, checkout, invoices and who sets terms. Do not assume that using an app store automatically makes the platform responsible.

VAT rates

Apply the rate for the consumer’s member state and product classification. Standard rates differ, and reduced rates can apply to certain e-publications or cultural products. Use the European Commission’s current rate database or local guidance.

Invoices and records

customer location evidence;
business-versus-consumer evidence;
product classification and VAT rate;
transaction date, consideration and currency conversion;
refunds, credits and chargebacks;
platform contracts and settlement reports;
OSS returns and payment confirmations.

OSS records generally need to be retained electronically for 10 years and made available on request.

UK VAT return

A supply outside the scope of UK VAT can still affect UK VAT-registration and recovery calculations. OSS VAT is not paid to HMRC on the UK VAT return. Ensure accounting software keeps EU VAT liabilities separate from UK output tax.

Example

A UK software business sells a £20 automated subscription directly to a French consumer. It identifies France using consistent payment and IP evidence, charges the applicable French VAT rate and includes the sale on its non-Union OSS return. A sale to a VAT-registered French company may instead be invoiced under the B2B reverse charge.