VAT Registration Requirements for Overseas E-commerce Sellers in the UK
With the rapid growth of cross-border e-commerce, more overseas businesses are entering the UK market through platforms like Amazon, eBay, and Shopify. Whether selling through a personal website or a major marketplace, non-UK businesses must stay informed to operate legally and competitively. However, many are unaware of their VAT obligations leading to compliance risks and potential penalties.
This article provides a comprehensive guide for overseas sellers, especially those trading online, to understand when VAT registration is required in the UK and what consequences may arise if this is overlooked.
Introduction to VAT
Value Added Tax (VAT) is a consumption-based tax charged on most goods and services sold in the UK. It is an indirect tax, meaning it is collected by businesses on behalf of HM Revenue & Customs (HMRC) and ultimately borne by the final consumer.
There are three main VAT rates in the UK:
- Standard rate – 20% (applies to most goods and services)
- Reduced rate – 5% (applies to items like children’s car seats, home energy, etc.)
- Zero rate – 0% (applies to certain goods such as food, children’s clothing, books, etc.)
Businesses that are established in the UK are generally required to register for VAT once their taxable turnover exceeds the VAT registration threshold of £90,000 (as of 2025). Taxable turnover includes sales of standard, reduced, and zero-rated goods or services, but excludes exempt supplies and the supplies which are outside the scope of UK VAT.
Once registered, a business is required to charge VAT—known as output tax—on its sales of taxable goods or services. At the same time, it may be entitled to reclaim input VAT incurred on eligible business purchases and expenses. The net amount (output tax minus input tax) is reported and paid to HMRC through periodic VAT returns, typically submitted on a quarterly basis.
VAT Implications for Overseas Traders
Unlike UK-established businesses, overseas traders do not benefit from the standard VAT registration threshold, which is £90,000 as of 2025. If a business is not established in the UK, this threshold simply does not apply.
Instead, overseas businesses are required to register for UK VAT as soon as they begin making taxable supplies in the UK—or even if they plan to make such supplies. There is no minimum turnover limit in these cases; even a single qualifying transaction can trigger the need to register.
This obligation applies regardless of how the goods reach the customer. Whether the products are shipped from overseas directly to UK buyers or are first stored in a UK fulfilment Centre such as through Amazon FBA (Fulfilment by Amazon)—the requirement to register remains the same. Essentially, once a non-UK business becomes involved in the supply of taxable goods within the UK, VAT registration becomes mandatory from the outset.
Failing to understand or act on these rules early can lead to serious consequences, including unexpected VAT liabilities, interest, and penalties. For many e-commerce businesses trying to enter the UK market, this is a critical area that’s often overlooked.
So, what about the different types of selling models and platforms? Do all e-commerce sellers need to register for VAT in the UK? Let’s dive into that in detail.
Do All E-Commerce Business Need VAT Registration in the UK?
Not necessarily. Whether an overseas e-commerce business needs to register for VAT in the UK depends on several practical factors. These include:
- Location of the goods at the time the sale takes place (whether the goods are already in the UK or shipped from overseas),
- Type of customer (whether the buyer is a UK consumer or a VAT-registered UK business),
- Sales channel used (whether the sale is made through an Online Marketplace like Amazon or eBay, or directly via a company’s own website like Shopify or WooCommerce),
- Value of individual consignments (especially for low-value goods), and
- Who is responsible for importation and delivery (the seller or the customer).
Understanding how these factors interact is crucial for determining VAT obligations. In the next section, we outline 8 common business models or trading scenarios that overseas sellers often operate under and explain how VAT registration rules apply in each case.
Scenario 1: Goods located inside the UK when sold → Sold to a VAT-registered business (Not via an Online Marketplace)
In the world of cross-border e-commerce, many overseas traders choose to hold stock within the UK—often using third-party fulfilment services or warehousing solutions to improve delivery times and gain customer trust. If those goods are sold directly to a UK VAT-registered business without using an online marketplace or e-commerce platform like Amazon or eBay, then VAT registration is immediately required.
In this case, you are making a taxable supply within the UK. That means you are responsible for charging UK VAT, issuing valid VAT invoices, and reporting the transactions through UK VAT returns. It doesn’t matter whether the volume is high or low, even a single sale to a UK business triggers this registration obligation.
Example:
A German e-commerce business sells industrial tools through its own branded website to UK-based VAT-registered wholesalers. The goods are stored in a UK warehouse (not managed by a marketplace). Although no marketplace is involved, the transaction is still considered a UK supply—so the German seller must register for UK VAT from the very first sale.
This is a common scenario among growing international e-commerce brands trying to maintain direct B2B relationships. But without timely VAT registration, they risk penalties, interest, and potential reputational damage in the UK market.
Scenario 2: Goods Located Inside the UK When Sold → Sold to a VAT-Registered Business (Via an Online Marketplace)
When goods are stored in the UK and sold via an online marketplace (OMP) like Amazon or eBay to a UK VAT-registered business, the VAT registration obligation still lies with the overseas seller. In this type of B2B transaction, the marketplace is not responsible for accounting for VAT, the seller must handle VAT themselves.
The online marketplace will usually notify the seller and provide the buyer’s VAT number as part of the order details. However, it’s important to note that the reverse charge mechanism does not apply in this situation. The overseas e-commerce seller must still charge UK VAT and issue a compliant VAT invoice.
Example:
An American electronics seller uses Amazon.co.uk to sell tools stored in a UK warehouse to VAT-registered UK retail businesses. Even though the sale happens through a platform and the buyer’s VAT number is shared, the seller must be VAT registered and account for the VAT directly.
Scenario 3: Goods Located Inside the UK When Sold → Sold to a Customer or Unregistered Business (Not via an Online Marketplace)
If an overseas seller keeps stock in the UK and sells directly to UK consumers or unregistered businesses without using an online marketplace then UK VAT registration is mandatory regardless of turnover in this case. These are standard B2C sales where the seller is fully responsible for charging UK VAT, issuing receipts, and filing VAT returns. The absence of a marketplace means there’s no one else to account for VAT on the seller’s behalf.
Example:
A US-based e-commerce clothing brand uses Amazon store to sell fashion products stored in a UK fulfilment Centre. Since the goods are located in the UK and sold directly to UK customers, the seller must register for VAT and charge it on each sale.
Scenario 4: Goods Located Inside the UK When Sold → Sold to a Customer or Unregistered Business (Via an Online Marketplace)
If you’re an overseas e-commerce seller storing goods in the UK—say, through Amazon FBA or another fulfilment service—and selling to UK consumers through an online marketplace, the platform steps in to handle the VAT obligations.
In this setup, the online marketplace (such as Amazon, eBay, or other platforms) is responsible for collecting and paying UK VAT at the point of sale. The sale is treated as a zero-rated supply from you (the seller) to the marketplace, and the marketplace then handles the VAT on the customer-facing transaction.
If all your UK sales are made through online marketplaces and you make no direct taxable sales, VAT registration is not required even if you’re selling from UK-based stock. However, if you store inventory in the UK or have any direct B2C activity, registration may still be necessary for compliance.
Example:
An Indian online seller uses Amazon FBA to store kitchenware in UK warehouses and sells only via Amazon.co.uk. Amazon takes care of VAT, and the seller doesn’t need to register unless they start making direct sales or fulfilment activities outside the platform.
Scenario 5: Goods Located Outside the UK When Sold → Value ≤ £135 → Sold to a VAT-Registered Business
When low-value goods (worth £135 or less) are sold from overseas to VAT-registered UK businesses whether inside or outside of an online marketplace, the rules are a little different and favorable for the seller.
In such B2B e-commerce transactions, the reverse charge mechanism applies. This means the UK buyer takes responsibility for accounting for VAT, so the overseas seller does not need to charge VAT at the point of sale. This means the seller does not need to register for UK VAT as long as they collect and retain a valid UK VAT number from the buyer.
This setup is ideal for cross-border sellers who operate independent e-commerce platforms, as it removes VAT compliance burdens on low-value B2B sales.
Example:
A Chinese e-commerce seller uses WooCommerce to sell electronic spare parts valued under £135 to a UK-based, VAT-registered tech firm. Since the buyer provides a valid UK VAT number, the seller doesn’t need to charge VAT or register, and the UK business handles VAT through the reverse charge.
Scenario 6: Goods Located Outside the UK When Sold → Value ≤ £135 → Sold to a Customer or Unregistered Business (Not via an Online Marketplace)
When you’re running an independent e-commerce store (such as through Shopify, WooCommerce, or your own platform) and ship low-value goods (£135 or less) directly from overseas to UK consumers or non-VAT registered buyers, the VAT responsibility lands squarely on you.
Because the sale doesn’t happen through an online marketplace, the burden of VAT collection is yours. In this type of direct-to-consumer (D2C) cross-border e-commerce, UK rules require that:
- You register for UK VAT, regardless of turnover.
- You charge VAT at the point of sale, based on UK rates.
- You report and remit the VAT through UK VAT returns.
Example:
A US e-commerce seller runs their own Shopify store, selling handmade jewelry directly to UK customers. Even though each item costs under £135 and ships from the US, the seller must register for UK VAT and collect it during checkout, as the sale isn’t facilitated by an online marketplace.
Scenario 7: Goods Located Outside the UK When Sold → Value ≤ £135 → Sold via an Online Marketplace to a Customer or Unregistered Business
In cross-border e-commerce, when low-value goods (worth £135 or less) are shipped from overseas and sold via an online marketplace such as Amazon, eBay, or Etsy, the platform itself becomes responsible for collecting and remitting VAT to HMRC.
This setup means that the online marketplace accounts for VAT at the point of sale, and the overseas seller is deemed to have made a zero-rated supply to the platform. As long as all UK sales are made exclusively via online marketplaces, there is no need to register for UK VAT.
However, if the seller also engages in direct e-commerce sales to UK customers or holds goods in the UK (e.g., using FBA or a UK returns hub), VAT registration may still be required.
Example:
A Thailand-based e-commerce seller lists £100 phone accessories on eBay and ships directly to UK consumers. Since the sale is handled entirely by eBay, the platform collects and pays the VAT to HMRC. The seller does not need to register for UK VAT—provided all UK sales remain exclusively via online marketplaces, and no other taxable presence exists.
Scenario 8: Goods Located Outside the UK When Sold → Value Over £135
When goods valued at over £135 are sold to UK customers from overseas, the transaction is treated as a standard import, and the VAT obligations shift considerably, especially in a direct-to-consumer e-commerce model.
If you’re an overseas seller using your own online platform or e-commerce website (i.e., not an online marketplace), you’ll likely be the importer of record. In that case, you must register for UK VAT, collect VAT at the point of sale, and include these sales in your UK VAT returns. Import VAT and customs duties will also arise when the goods enter the UK, and you (or your customer, depending on agreed incoterms) must handle these during customs clearance.
Example:
A tech retailer in Singapore sells a £300 smart device via their own Shopify store, shipping directly to a UK customer. Since the order value exceeds £135 and the sale happens outside a marketplace, the Singaporean seller is treated as the importer. They must register for UK VAT, charge VAT on the sale, and account for import VAT and duties at the UK border.
Risks of Not Registering for VAT
VAT registration is a legal obligation in many of the scenarios discussed above. For overseas e-commerce sellers, failing to comply can lead to growing issues that may quietly build overtime, impacting both finances and reputation.
What may seem like a small oversight today can quickly attract HMRC’s attention and disrupt your ability to trade smoothly on online platforms and marketplaces.
Key risks include:
- Backdated VAT bills: HMRC can assess VAT from the date you were first liable to register, even if you were unaware.
- Interest and penalties: Late VAT registration, payment of VAT and inaccurate VAT returns can lead to financial charges and penalties which grow quickly over time.
- Reduced platform trust: Marketplaces such as Amazon or eBay may flag or limit sellers who fail to meet tax compliance standards.
- Marketplace account suspension: Continued non-compliance may lead to restrictions or suspension of your selling privileges.
How UK Property Accountants can Support Your E-Commerce VAT Compliance
At UK Property Accountants (UKPA), we specialize in helping overseas e-commerce sellers navigate UK VAT obligations with confidence. Whether you sell through your own website or platforms like Amazon, eBay, or Shopify, we offer tailored support to keep you compliant and focused on growth.
Our services include:
- UK VAT Registration for Non-UK Sellers
We manage the full VAT registration process for overseas businesses, ensuring your application is submitted correctly and efficiently. This helps you start selling in the UK without unnecessary delays. - Ongoing Compliance & VAT Return Filing
From calculating VAT accurately to preparing and submitting your VAT returns and even responding to HMRC queries, we provide end-to-end compliance support to ensure you meet all requirements with ease. - VAT Risk Assessment
We review your selling model to identify potential risks and recommend corrective steps reducing your risk of future penalties or compliance issues. - Platform-Specific Guidance
Whether you’re using Amazon FBA, Shopify, eBay, Etsy, or others—we provide marketplace-focused VAT advice that fits your business model.
With UKPA by your side, you’ll stay VAT-compliant from day one, giving you the peace of mind to concentrate on scaling your business in the UK market.
Conclusion
Navigating UK VAT obligations as an overseas e-commerce seller can be challenging, especially with varying rules depending on the location of goods, the value of consignments, and whether an online marketplace is involved. Yet one thing remains clear: most non-UK businesses selling to UK customers must consider VAT registration as a priority not an option.
Staying ahead of these rules is not just about compliance; it’s about protecting your business, avoiding penalties, and building customer trust. If you’re unsure whether your current setup triggers a VAT obligation, or if you’re concerned about potential exposure, our specialist VAT team is here to help. We’ll guide you through the requirements, ensure full compliance, and help position your business for long-term success in the UK market.
Samyog Acharya
He is a driven ACCA in-the-making, passionate about taxation, financial reporting and corporate finance. With a keen eye for IFRS compliance, he's on a mission to master the world of accounting.