EU VAT for small online sellers, in plain language

VAT is the compliance area that catches small sellers most often, because the rules change depending on what you sell, to whom, and where they are. This is the map. The detail that binds you comes from a tax adviser — that is not a disclaimer for its own sake, it is because the penalties fall on you and not on a website.

The two questions that determine everything

1. Are you selling to a consumer (B2C) or a business with a valid VAT ID (B2B)?
2. Are you selling physical goods, or digital services and downloads?

B2B inside the EU

If your business customer has a valid VAT ID in another member state, you generally invoice without VAT and note the reverse charge. Validate the ID through VIES and keep the confirmation. An invalid ID means the VAT liability comes back to you.

B2C physical goods across borders

There is a single EU-wide distance-selling threshold of €10,000 per year across all member states combined. Below it you may charge your home rate. Above it you charge the customer's local rate — and OSS lets you file all of it through one return in your own country instead of registering in each.

B2C digital goods

Stricter. The place of supply is the customer's country from the first euro for cross-border sales, so the same €10,000 threshold applies but the record-keeping is heavier: you generally need two pieces of non-contradictory evidence of where the customer is, kept for ten years.

Small business status in Germany

The Kleinunternehmerregelung lets small businesses below defined turnover limits invoice without VAT domestically. It does not exempt you from the cross-border rules above, and the thresholds have been revised in recent years — check the current figures rather than a blog from three years ago.

What your shop must do

• Show consumer prices including VAT.
• Charge the correct rate per destination once you are over the threshold.
• Validate VAT IDs for reverse-charge sales, automatically.
• Produce invoices with all legally required fields.
• Export the data your accountant needs without manual work.

The practical advice

Configure this before launch, not after the first cross-border order. Retrofitting VAT logic to a live shop with existing orders is one of the more unpleasant jobs in e-commerce, and correcting historical invoices is worse.