border.bot
Esc
  • Loading…
↑ ↓ to move↵ to openEsc to close
Docs menu
DevelopersGuides

HS codes

Origin and trade agreements

VAT, GST and sales tax for cross-border sellers

How VAT, GST and US sales tax differ, who collects each on a cross-border order, and the seller schemes in the EU, UK, Australia, NZ, Norway and US states.

Updated · 15 official sources

VAT and GST are the same kind of tax: a consumption tax charged at every stage of the supply chain, where each business deducts the tax it paid on its purchases so that only the final consumer bears it. US sales tax works differently. States and local governments charge it on retail sales, without the reclaim chain, and it is never collected at the border. For a seller abroad, the practical question is the same in every case: who has to collect the tax on your order.

Rules as of 30 October 2026.

How do VAT and GST work?#

VAT and GST are charged by every registered business on its sales and reclaimed on its purchases, so each business pays tax only on the value it adds. HMRC describes the VAT a business pays as usually the difference between the VAT it paid and the VAT it charged. The consumer, who can't reclaim, carries the whole tax.

A short chain shows it, at a 20% rate. A maker sells a lamp to a shop for 100 plus 20 VAT and pays the 20 to the tax office. The shop sells it to a consumer for 150 plus 30 VAT, reclaims the 20 it paid and pays 10. The tax office has received 30 in total, which is 20% of the final price, and the consumer has paid all of it.

Imports fit the same chain. A business importing goods pays import VAT or GST at the border and reclaims it like any other purchase tax; a consumer importing goods pays it and keeps the cost. That's why the rules for low-value parcels focus on consumer orders.

How is US sales tax different?#

US sales tax is a tax on retail sales, set separately by each state and many local governments, with no federal sales tax or VAT behind it. A seller collects it at the point of sale only where the state requires that seller to, so the same order can be taxed in one state and not the next.

Since the Supreme Court's 2018 decision in South Dakota v. Wayfair, a state can require a seller with no physical presence in it to collect its sales tax. Each state sets its own threshold. Texas, for example, doesn't require a remote seller with less than $500,000 of Texas revenue in the previous 12 calendar months to hold a permit or collect its tax, while Washington requires marketplace facilitators with more than $100,000 of combined gross receipts in the state to register.

Marketplaces collect for the sellers on them. Washington requires a marketplace facilitator to collect and report sales tax on retail sales made through its marketplace, and in Texas a remote seller selling only through a marketplace that certifies it collects the tax doesn't need its own permit. None of this happens at the border: CBP collects duty, not sales tax.

VAT GST US sales tax
Where EU, UK, Norway and most of the world Canada, Australia, New Zealand and others US states and localities
Charged on Every sale in the chain, reclaimed by registered businesses Every sale in the chain, reclaimed by registered businesses Retail sales
Charged at import Yes Yes No
Rate set by Each country (each member state in the EU) Each country, plus provinces in Canada Each state and locality

Who collects tax on a cross-border order?#

On a cross-border consumer order, tax is collected either by customs at the border, from whoever imports the goods, or by the seller at checkout under the destination's registration scheme for low-value goods. Where a scheme applies and the seller is registered, the parcel crosses the border with its tax already paid and the buyer owes nothing more on delivery.

Destination Scheme covers Who registers and collects Since
European Union (IOSS) Distance sales of goods in consignments up to €150, except excise goods Optional. A seller or marketplace registers in one member state; a seller outside the EU appoints an intermediary established in the EU 1 July 2021
United Kingdom Consignments of goods up to £135 sold to customers in Great Britain The seller charges UK VAT at the point of sale; marketplaces have their own rules 1 January 2021
Australia Goods with a customs value of AUD 1,000 or less, except tobacco and alcohol Sellers, electronic distribution platforms and redeliverers whose sales to Australian consumers reach the GST registration threshold 1 July 2018
New Zealand Goods valued at NZ$1,000 or less, except alcohol and tobacco Sellers, online marketplaces and redeliverers with supplies to NZ consumers of NZ$60,000 or more in the last 12 months, or expected to exceed it in the next 12 1 December 2019
Norway (VOEC) Items up to NOK 3,000, except foodstuffs, restricted goods and goods subject to special taxes Online shops and marketplaces, mandatory once turnover reaches NOK 50,000
US states Remote retail sales Sellers and marketplace facilitators above each state's threshold 2018, after Wayfair

Before shipping into a market with a seller scheme, have these in place:

The country guides go further: the EU VAT guide covers IOSS, the special arrangements and deemed suppliers, the UK VAT guide the £135 rules, and the New Zealand GST guide and Australia guide their schemes. Switzerland and Singapore have their own rules for sellers abroad, set out in the Swiss deemed supplier guide and the Singapore overseas vendor guide.

What happens when the seller doesn't collect?#

When the seller doesn't collect the tax at checkout, it is charged at the border on the normal import rules, and someone in the destination has to pay it before the parcel is delivered. That is usually the buyer, through the carrier, with the carrier's own fee on top, which is the delivered-at-place arrangement.

In the EU, a seller without IOSS can leave import VAT to the carrier or postal operator under the special arrangements, where the customer is the person liable and the carrier collects it and pays it over monthly. Under VOEC, goods from a shop that isn't registered are cleared through Norwegian Customs' TVINN system as ordinary imports, and the buyer also pays the transporter a clearance fee. The DDP guide compares collecting everything at checkout with leaving it to the buyer.

Australia and New Zealand don't leave the choice open above their thresholds: a seller whose sales to consumers there reach the registration threshold, NZ$60,000 in 12 months in New Zealand, has to register and charge GST on low-value goods.

Do business buyers pay the tax at checkout?#

Business buyers registered for the tax are usually outside the low-value schemes, because they account for the tax themselves. The UK, Australia and New Zealand each say so in their rules, which keeps a seller from charging tax that the buyer would only have to reclaim.

In the UK, a seller doesn't charge VAT on a consignment of £135 or less when the customer gives a valid UK VAT registration number; the customer accounts for it under the reverse charge. Australian GST isn't charged on low-value goods imported by GST-registered businesses for use in their business, and New Zealand's rules don't apply to sales to GST-registered businesses buying for business purposes, with some exceptions.

Common questions#

Is GST the same as VAT?#

Yes, in how it works. GST is the name Canada, Australia, New Zealand and some other countries use for a value added tax: charged at each stage, reclaimed by registered businesses and borne by the consumer.

Do I have to register for IOSS to sell to the EU?#

No. IOSS is optional. Without it, VAT on parcels up to €150 is collected at import, usually from the buyer through the carrier; with it, you charge VAT at checkout and the parcel clears without a VAT bill.

Does a foreign seller have to collect US sales tax?#

It can. After Wayfair, states can require remote sellers to collect once their sales into the state pass the state's threshold, and marketplaces collect for the sellers on them. The thresholds and rules differ by state.

Can a business reclaim import VAT?#

A business registered for VAT or GST in the destination can usually reclaim import tax it paid on goods for its business, like tax on any other purchase. A consumer can't.

Sources#