How does VAT work when you sell to other European Union countries?
There is a single threshold, and it is cumulative across the whole Union: €10,000 a year of distance sales to consumers. Below it everything stays simple; above it, every order carries the customer's country rate.
Short answer
- The threshold is €10,000 a year, net of VAT, across all distance sales to EU consumers.
- Below the threshold, Italian VAT applies to every order.
- Once the threshold is passed, the destination country's rate applies.
- With the OSS scheme you settle everything in one quarterly return, without registering for VAT abroad.
- You may join OSS below the threshold too, but the choice binds you for two calendar years.
Below and above the threshold
VAT on sales to EU consumers
| Situation | VAT applied | How it is paid |
|---|---|---|
| Below €10,000 a year | Italian rate | Ordinary VAT settlement |
| Above €10,000 a year | Customer country's rate | Quarterly OSS return |
| Voluntary OSS registration | Customer country's rate | Binding for two calendar years |
| Sale to an EU VAT-registered business | Zero-rated intra-EU supply | VIES registration and Intrastat filings |
A practical example
Example: an Italian store sells €4,000 in Germany, €3,500 in France and €3,000 in Spain in the same year. That totals €10,500: the threshold is crossed and from that point German orders take the German rate, French orders the French rate, and so on. With OSS you do not need a VAT number in each country: everything is settled in one quarterly return.
Common mistakes
- Treating the threshold as per-country: it is cumulative across the whole Union.
- Continuing to apply Italian VAT after the threshold has been crossed.
- Showing catalogue prices that change at checkout because the foreign rate differs.
- Joining OSS without knowing the choice binds you for two calendar years.
How 4shopy helps
- VAT rates can be set per destination country, not only per product.
- The store is multilingual and multi-currency: the same product page serves several markets.
- Order exports can be split by country, which helps when filling the quarterly return.
- Documents generated in the 4b2b ecosystem carry the regime applied to the order.