Do I need to pay VAT as ecomm sole proprietor being paid to UK, but with supplier in US?

Accounting & Taxes
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Topic summary

Ecommerce apparel sales fulfilled from the US, with revenue received in a UK bank, raise VAT obligations based on where goods are delivered, not citizenship or bank location. US sales tax follows economic nexus thresholds (e.g., $100k/200 transactions), as noted by the poster.

  • UK VAT: Not required if no sales to UK customers. VAT is due on deliveries into the UK, especially for low-value consignments (≤£135), regardless of total sales volume.
  • EU VAT: VAT is due on deliveries into the EU. For consignments ≤€150, registration with the EU IOSS (Import One‑Stop Shop) is recommended to collect/remit VAT at checkout.
  • IOSS: A system for non‑EU sellers to declare and pay EU VAT on low‑value imports, simplifying compliance.

Practical recommendations: Register for UK VAT and EU IOSS; use a corporate bank account for clarity.

Distance‑selling thresholds: The poster is unsure about their status. The response emphasizes low‑value consignment thresholds and IOSS rather than any remaining distance‑selling thresholds.

Status: Guidance provided; some questions (e.g., detailed treatment of German VAT beyond EU deliveries) remain open.

Summarized with AI on February 7. AI used: gpt-5.
1

Hello there,

I will soon be launching an ecommerce apparel brand (print on demand) on Shopify as a sole proprietor.

Here is my situation:

I currently am a digital nomad but a UK and US national, with my main account to receive revenue being in London, UK.

I am exclusively using a US-based supplier to print and fulfill my clothing products for my store, and mainly selling to the US but also at some point internationally.

I will be connecting my UK bank account to my store to receive earnings into.

As I understand, I am not required to pay sales tax to the US until I hit a certain threshold (as per current information – Economic Nexus Threshold: $100,000/year in gross revenue or 200 or more separate transactions on the previous or current calendar year’s sales).

However, am I required to pay VAT to the UK government:

  1. because my account receiving sales revenue is in the UK and I am a UK citizen?

  2. am I required to pay this immediately or is it also only once I hit a certain threshold of revenue made?

Lastly, is collecting tax based on how much revenue you make selling to a particular country overseas? i.e. if I end up having a large number of German buyers, even though I am not a German citizen, do I owe tax to the German government?

Thanks a lot.

Best,

MJ

2

What is confusing me is that there is mixed information online as to the validity of the ‘distance seller threshold’ for VAT tax in UK and EU… some say the threshold is still in place, others say that has recently ended.

3

Hi MJ!

VAT is a tax on products sold, it is not a corporate tax. So if you are not selling to UK customers, there is no UK VAT. There will be other taxes on that corporation.

VAT is payable on all sales for deliveries from US to EU and UK. We strongly recommend registering to EU IOSS and UK VAT as your goods clearly fall under the thresholds 150€ / 135£. Regardless of your sales amount.

You should have a corporate bank account for clarity.