EU VAT on digital products: a founder’s cheat sheet

If you sell software, courses, or any other digital product to people in the EU, VAT applies — even if your company is based somewhere else entirely. The rules are more consistent than they used to be, but there are still a few things every founder should know before their first European sale.

The customer’s country sets the rate

For B2C digital sales, VAT is charged at the rate of the country where your customer lives, not where you’re based. That’s 27 member states with 27 standard rates, plus reduced rates for things like e-books in some countries. You also need evidence of where the customer is — typically their billing address and IP location.

B2B sales usually work differently

When you sell to a VAT-registered business, the reverse-charge mechanism usually applies: you don’t charge VAT, and the customer accounts for it themselves. To qualify, you need to validate their VAT ID and show the reverse charge on the invoice. Get the validation wrong and the VAT is on you.

The One Stop Shop

Since 2021, the One Stop Shop (OSS) lets you register in a single EU country and file one quarterly return for sales across the whole EU. It’s a big improvement, but you still need the registration, the per-country calculations, and the quarterly filings.

Or let someone else handle it

As your merchant of record, we’re the seller of record for every EU sale. We validate VAT IDs, apply the right rate, issue compliant invoices, and file the returns. You don’t need an OSS registration at all.