What is distance selling for VAT purposes?
Answered 17 March 2026
Based on the retrieved sources, here is a comprehensive answer:
What is Distance Selling for VAT Purposes?
HMRC Guidance / Practice
Definition
"Distance selling" describes supplies of delivered goods where the VAT-registered supplier is responsible for delivery to a non-taxable person in another territory, and delivery is made by or under the directions of the supplier. Mail order and internet sales are classic examples.
Who are the recipients?
The recipients of distance sales are mainly private individuals, but can also include:
- Small unregistered businesses
- Businesses making only exempt supplies
- Charities and public bodies
The key requirement is that the customer is not registered for VAT.
Post-Brexit Position (from 1 January 2021)
The distance selling rules no longer apply to supplies between Great Britain (England, Scotland and Wales) and EU member states. From 1 January 2021, the relevant provisions (sections 7(4) and 7(5) of the VAT Act 1994) were removed from UK law. However, distance selling rules continue to apply to businesses moving goods between Northern Ireland and the EU.
Purpose of the Rules
The rules are intended to combat distortion of trade and unfair competition by transferring the place of supply to the country in which the customer receives the goods. Without these rules, cross-border supplies to private individuals would be taxed in the country of dispatch, potentially incentivising businesses to relocate to lower VAT-rate jurisdictions.
Exclusions
New means of transport (new motor vehicles, boats and aircraft) are excluded from distance selling arrangements. Their place of supply remains the country of dispatch regardless of the customer's status.
Place of Supply and Thresholds
Under the place of supply rules, distance sales are usually taxed in the member state of origin until the total value of supplies to the destination member state exceeds that state's distance selling threshold. For Northern Ireland businesses, the current threshold is £8,818 (€10,000) per calendar year. Once the threshold is exceeded, the place of supply shifts to the EU member state of destination, and the supplier becomes liable to register and account for VAT there.
One Stop Shop (OSS)
To simplify compliance, businesses making distance sales from Northern Ireland can use the One Stop Shop (OSS) — a single quarterly return and payment portal — rather than registering for VAT in every EU member state to which they supply.
What the Law Says
The current UK legislative basis for distance selling rules (as they apply to Northern Ireland/EU transactions) is found in paragraph 29, Schedule 9ZB of the VAT Act 1994. The registration criteria for distance sellers are set out in Part 9 of Schedule 9ZA to the VAT Act 1994.
Citation sources
PART 3 Other taxes Value added tax Distance selling: Northern Ireland 95 1 In Schedule 18, which makes provision in relation to the Protocol on Ireland/Northern Ireland in the EU withdrawal agreement about value added tax and distance selling— a Part 1 makes provision amending— i the criteria for registration under Part 9 of Schedule 9ZA to VATA 1994 (value added tax on acquisitions in Northern Ireland from member States: registration in respect of distance sales), and ii the application of the
(a) Accounting for VAT Businesses registered for VAT in the UK and which make distance sales from Northern Ireland should tell HMRC that they are as trading under the Northern Ireland Protocol. If you make distance sales from Northern Ireland you should charge UK VAT until: the value of your supplies in a calendar year exceed the distance selling threshold of £8818 (€10,000) in respect of goods you exercise the option described in paragraph 6.10 Once the value of your distance sales exceeds this
The VAT treatment of distance sales derives from the special place of supply rules that apply in these circumstances. For further information about this see the manual covering the place of supply of goods (VATPOSG). Under the place of supply rules distance sales are usually taxed in the Member State of origin until the total value of supplies to the Member State of destination exceeds the latter’s distance selling threshold. (But see VATSM3730 where distance sales involve excise goods.) The thr
The term ‘distance selling’ describes transactions in which the VAT registered supplier is responsible for delivery of goods to a non-taxable person in another Member State. Mail order and internet sales are good examples of this. The non-taxable customer may be a private individual, public body, charity or any business which is too small to register or whose activities are totally exempt. It is important to note that distance selling can only occur between Member States. So mail order sales to
From 1 January 2021 sections 7(4) and 7(4) were removed from UK law as they related to distance sales from EU member States to customers in Great Britain (England, Scotland and Wales) (7(4)) and distance sales from Great Britain to customers in EU Member States (7(5)). However, the distance selling rules still apply to businesses moving goods from Northern Ireland to the EU and vice versa. The relevant UK legislation applying to these businesses is now contained in Para 29 Schedule 9ZB VAT Act.