EU VAT Compliance Guide
Since 1 July 2021, businesses selling goods or digital services cross-border to EU consumers face a single €10,000 annual distance-sales threshold under Council Directive 2006/112/EC. Below it, you charge VAT at your home-country rate; above it, you register in each destination Member State or use the One Stop Shop (OSS). The ViDA package, agreed in 2024, extends real-time digital reporting and extends OSS to platform economies and B2B intra-EU supplies by 2027–2030.
EU VAT is not one tax — it is 27 national VAT systems coordinated by a shared directive. For a small business, the practical framework is the €10,000 distance-sales threshold and the OSS / IOSS schemes that let you register once and declare across borders. The compliance burden is record-keeping: every cross-border invoice must carry the right VAT rate for the destination country, the correct customer evidence, and be attributable to the right OSS return line. The ViDA package will tighten this further by introducing digital reporting requirements (DAV) and extending OSS scope — so the quality of the underlying invoice data matters more, not less.
VAT Rates
| Rate | Applies To |
|---|---|
| Per Member State | Each EU country sets its own standard (17–27%), reduced, and super-reduced rates. No single EU rate exists. |
| Distance sales below €10k | Home-country rate applies if you are established in the EU |
| Distance sales above €10k | Destination-country rate applies — declared via OSS or registered locally |
Registration Thresholds
| Scheme | Threshold |
|---|---|
| EU-wide distance sales threshold | €10,000 combined annual cross-border B2C sales of goods + telecom/broadcast/electronic services |
| OSS (Union scheme) | For EU-established businesses selling B2C across borders above the €10k threshold |
| IOSS (Import scheme) | For non-EU sellers of imported goods valued ≤ €150 — voluntary but removes the €22 exemption that was abolished in 2021 |
Filing Requirements
OSS return
Quarterly electronic return filed in the Member State of identification. Declares VAT due in each destination Member State and pays a single amount. The MS of identification redistributes.
IOSS return
Monthly return for non-EU sellers using IOSS. Collects VAT at point of sale on imports ≤ €150 and remits monthly to a single MS.
VIES recapitulative statement
Lists intra-EU B2B supplies (Article 226 of Directive 2006/112/EC). Required for any business making intra-community supplies, regardless of the €10k threshold.
E-Invoicing Status
EU-level mandate: Directive 2014/55/EU requires B2G e-invoicing in all Member States. The ViDA package (agreed November 2024) introduces a digital reporting framework (DAC7 successor / DAV) requiring structured e-invoicing for intra-EU B2B transactions, phased in from 2030. Member States retain authority over domestic e-invoicing mandates.
Key Deadlines
OSS: quarterly return due by the end of the month following the quarter. IOSS: monthly return by the end of the following month. VIES: monthly (or per national rules).
How Nika Helps
Nika captures every cross-border invoice — including the destination country, customer VAT status, and the correct VAT rate — so the records behind an OSS or VIES return are complete and reconcilable, from {price} per processed invoice. Nika does not file the OSS / IOSS / VIES return — that is the accountant or fiscal representative's job.
What is the €10,000 EU distance-sales threshold?
It is the combined annual value of cross-border B2C sales of goods and digital services to EU consumers. Below €10,000 you charge your home-country VAT; above it, you must account for VAT in each destination country via OSS or local registration.
What is ViDA and when does it affect me?
VAT in the Digital Age (ViDA) is the EU reform package agreed in 2024. It extends real-time digital reporting to intra-EU B2B transactions, broadens OSS to platform economies, and removes the exemption for small imports. The B2B digital reporting rules phase in from 2030.