Sell a single €9 course to a customer in Munich and you owe Germany VAT on it. There's no threshold, no grace period, and "I'm not in Europe" is not a defense EU tax authorities recognize.

Key Numbers to Know (2026)

• EU VAT threshold for non-EU sellers of digital services to consumers: €0 — register and charge VAT from the first sale

• Non-Union OSS: register in one EU member state, file one quarterly return, VAT distributed to member states

• B2B sales to EU businesses: reverse charge applies, no VAT charged by you (customer's VAT ID required)

• B2C sales to EU consumers: VAT charged at the rate of the customer's country

• VAT invoice requirements: VAT number, VAT rate, VAT amount shown separately

• Penalties for non-compliance: vary by member state, and are not trivial

The Rule Non-EU Sellers Miss

If you're a US, Panamanian, Australian, or Singapore-based business selling digital services (SaaS, subscriptions, courses, downloads) to EU consumers, you owe EU VAT from the first sale. Most non-EU owners assume "I'm not in Europe" gets them out of it. It doesn't.

VAT Rates by Country

Rates vary by member state, and the rate that applies is your customer's, not yours.

• Luxembourg
  Standard VAT rate: 17%

• Germany
  Standard VAT rate: 19%

• France
  Standard VAT rate: 20%

• Ireland
  Standard VAT rate: 23%

• Portugal
  Standard VAT rate: 23%

• Hungary
  Standard VAT rate: 27%

A German customer pays 19%. The same course sold to a Portuguese customer carries 23%. Modern billing platforms (Stripe Tax, Paddle, Chargebee) apply the right rate automatically once configured — you don't calculate this by hand.

How Compliance Actually Works

Register for Non-Union OSS in one EU member state — Ireland and the Netherlands are common choices for English-speaking businesses. File one quarterly VAT return; the revenue is distributed to member states based on where your customers are.

B2B Is Different: Reverse Charge

Sell to an EU business and you don't charge VAT; the customer accounts for it under reverse charge. You still have to verify their VAT number via VIES, show "Reverse charge — Article 196 of Council Directive 2006/112/EC" on the invoice, and report the sale in your EC Sales List.

Why Merchant of Record Is Popular Here

Paddle, LemonSqueezy, and FastSpring take on the VAT registration burden entirely — their platform is the legal seller, so their VAT numbers appear on the invoices. For smaller sellers this removes most of the compliance work at the cost of a higher transaction fee.

What Enforcement Actually Looks Like

EU tax authorities have increased enforcement against non-compliant non-EU digital sellers, payment platforms increasingly share data, and marketplace facilitator rules push liability up the chain. Non-compliance is not risk-free, and back-VAT plus penalties can be substantial.

Choosing Your Compliance Route

Selling mostly B2C digital products under roughly $500K/year: register for Non-Union OSS yourself, one return a quarter is manageable. Selling higher volume, multiple product lines, or you want to spend zero hours on this: use a Merchant of Record and accept the higher fee for the offloaded liability. Either way, don't wait for the first sale to figure this out — the threshold has already passed by then.

Registering Without Losing a Month to It

EU VAT compliance is mechanical once it's set up right. On a scoping call, we confirm whether OSS registration or a Merchant of Record makes more sense for your volume, and walk through the registration itself. Book one here.

This is general information, not personal tax or legal advice — get a qualified adviser to confirm how this applies to your specific product and customer base.