Sales tax and VAT for online stores selling internationally (2026)

Sales tax and VAT for online stores selling internationally comes down to one question per market: is the tax collected at your checkout, or at the border, and who's responsible for it? In the US you collect state by state once you pass each state's economic nexus threshold. In the UK, the EU and Australia, low-value parcels are taxed at the point of sale, so an overseas seller often has to register and charge local VAT or GST from home. This guide sets out the rules and thresholds exactly as the official pages print them (all opened on 26 October 2026), then covers marketplaces, digital products and what Shopify Tax does and doesn't do.

The rules at a glance

Each market below has a different trigger, so check them one by one against your own sales. Figures are as printed on the linked official page.

United States: economic nexus after Wayfair

You only collect US sales tax in states where you have nexus, and since 2018 you can have nexus from sales alone. On 21 June 2018 the Supreme Court ruled in South Dakota v. Wayfair that states can require sellers to collect and remit sales or use tax on sales delivered into the state "regardless of physical presence." Each state then set its own threshold, and there's no federal sales tax to register for instead.

The Streamlined Sales Tax Governing Board keeps a state-by-state chart of thresholds and compliance dates. It defines a remote seller as "generally a seller that does not have a physical presence in a state." Useful, but the chart says it reflects information as of 11 January 2023, with some later edits, so confirm each figure on the state's own page before you rely on it.

Three example states

The big states share a US$500,000 figure but measure it differently.

• California: you must collect use tax if your total combined sales of tangible personal property for delivery in California, with related persons, exceed US$500,000 in the preceding or current calendar year. It applies to sales on and after 1 April 2019.
• Texas: remote sellers with total Texas revenue of less than US$500,000 in the preceding twelve calendar months don't need a permit. Total Texas revenue counts taxable and nontaxable sales into Texas, including separately stated shipping and handling. Once over, you must get a permit and start collecting no later than the first day of the fourth month after the month you crossed it. Texas also offers remote sellers a single local use tax rate, printed as 1.75 percent, instead of tracking every local rate.
• New York: you're presumed to be soliciting business if, over the immediately preceding four sales tax quarters, you made more than US$500,000 of sales of goods delivered into the state and more than 100 such sales. Both tests must be met. New York says sales through online marketplaces should be included in that calculation.

Many smaller states use lower thresholds, which is why one strong month in a small state can matter more than steady sales into California.

Marketplace facilitator rules

If a marketplace makes the sale, it usually collects the tax, not you. The Streamlined board says many states' laws require the marketplace facilitator to collect and remit sales tax on the sales it facilitates, though marketplace sellers "may also be required to register and file returns" depending on the state.

California shows how this works in practice. Since 1 October 2019 a marketplace facilitator is considered the seller and retailer for sales on its platform, and you don't need a California seller's permit if all your retail sales go through a registered facilitator. But to test your own nexus, California says you must include your sales facilitated through a marketplace, and New York's nexus page says the same for its threshold.

So Amazon or Etsy sales can push you over a threshold that then applies to your own Shopify store.

Free filing help in Streamlined states

Streamlined member states will pay a certified provider to handle your sales tax, if you qualify. The board's free services page says a remote seller that only has to report and remit in a member state can be a "CSP-compensated seller." You register through the Streamlined Sales Tax Registration System and contract with a certified service provider; the state then covers tax calculation, return filing, remittance and audit handling for that state. The conditions include having no fixed place of business there for more than 30 days and property and payroll each under US$50,000 in the state. It doesn't cover non-member states such as California, Texas or New York.

United Kingdom: the £135 rule

For goods outside the UK at the point of sale, the £135 rule moves VAT from the border to your checkout. GOV.UK says goods in consignments of £135 or less sold to customers in Great Britain have UK supply VAT charged at the point of sale, and "the seller must charge and account for VAT." To do that you need to register for UK VAT. The £135 limit applies to the value of the whole consignment, not each item.

The other cases on the same page:

• Over £135: "normal VAT and customs rules will apply on importation," so import VAT is due when the goods arrive.
• Business customers: if it's a business-to-business sale and the customer gives you their UK VAT registration number, you don't charge VAT at the point of sale.
• Northern Ireland: consignments of £135 or less going to Northern Ireland have import VAT charged instead.
• Stock in the UK: if you own goods "of any value" located in the UK at the point of sale, such as in a UK 3PL, you must register and account for VAT.

Marketplaces change who pays. When overseas goods of £135 or less are sold through an online marketplace, GOV.UK says the online marketplace will be liable for the VAT. The same applies to goods already in the UK sold by an overseas seller through a marketplace.

European Union: OSS, IOSS and the €10,000 threshold

The EU has three One Stop Shop schemes, and which one you use depends on where you're based and where the goods ship from. The European Commission says the rules on cross-border business-to-consumer ecommerce changed from 1 July 2021, when the old VAT exemption for small consignments (up to €22) was removed, so "all goods imported in the EU are subject to VAT."

The Commission's scheme page splits them like this:

• Union scheme: intra-EU distance sales of goods and some services. A taxable person not established in the EU "can also use the Union scheme to declare certain supplies of goods." Quarterly returns.
• Non-Union scheme: services to EU consumers by businesses with no EU establishment. Quarterly returns.
• Import scheme (IOSS): distance sales of goods imported from outside the EU. Monthly returns.

All three are optional. Without them, the Commission says a supplier would need to register in each member state where it supplies goods or services.

The €10,000 threshold only helps EU-based sellers

The €10,000 figure is the one most often misquoted. The Commission says the annual €10,000 threshold covers intra-EU distance sales of goods dispatched from the member state where the supplier is established, for a supplier established in only one member state. It "does not apply to other services than TBE services nor to distance sales of imported goods," and suppliers based outside the EU with an EU fixed establishment can't use it. Below the threshold, an EU-based seller may charge its home country's VAT; above it, Your Europe says sellers have to apply VAT in the country where the goods are delivered, which the Union OSS scheme lets you declare in one return.

If you're shipping from Bali, Australia or the US into the EU, the threshold doesn't apply to you. EU VAT is due on the first sale.

IOSS for parcels of €150 or less

IOSS lets you charge EU VAT at checkout so the parcel clears without a VAT bill for your customer. The Commission says the import scheme covers goods "in consignments of an intrinsic value not exceeding EUR 150," excluding goods subject to excise duty, and IOSS returns are filed monthly.

The catch for founders abroad: "a taxable person established outside the EU is required to appoint an intermediary to use the import scheme." The intermediary registers in its own member state and gets a separate IOSS number for each seller it represents. Above €150, IOSS isn't available and VAT is handled at import under the normal rules.

Without IOSS, VAT on parcels up to €150 is collected at import rather than at your checkout, so your customer usually meets it on delivery, which is the same refused-parcel problem we cover for US duties in shipping to the US after de minimis.

The new €3 customs duty on low-value parcels

From 1 July 2026, the EU charges a temporary €3 customs duty per item on goods in consignments up to €150 sold in distance sales, until 1 July 2028, after which normal customs duties apply. "Per item" means per tariff classification, not per unit. It applies "regardless of VAT scheme (IOSS, Special Arrangements, or standard VAT)," so registering for IOSS doesn't remove it. Product identifiers become mandatory from 1 November 2026. This is a customs duty, not VAT, so budget for both.

Australia: GST on goods worth A$1,000 or less

Overseas sellers charge Australian GST on low-value goods once they pass the registration turnover. business.gov.au says GST is a tax of 10% on most goods, services and other items sold or consumed in Australia. It lists "goods worth A$1000 or less" among the imports covered on retail sales to Australian consumers, along with services and "digital products (including movies, apps, games and e-books)."

The trigger is turnover: "If your overseas business has a GST turnover of A$75,000 or more, you must register for GST." The same page notes special rules may apply to non-residents and to operators of app stores or websites. The ATO's own pages on low-value imported goods and marketplace rules refused to load for us on 26 October 2026, so we've left out the details of how platforms are treated. Check ato.gov.au before you assume a marketplace collects for you.

Digital products

Digital products follow the same destination logic, usually with no low-value relief. In the EU, the Non-Union OSS scheme is for businesses with no EU establishment that supply services to EU consumers, and Shopify's EU tax reference says a Non-Union OSS registration is for merchants outside the EU selling digital products to EU customers. In Australia, digital products are named alongside low-value goods on business.gov.au.

If most of your revenue is digital, a merchant of record can take on registration, collection and filing for you. Our guide to merchant of record vs Stripe compares the costs.

What Shopify Tax does and doesn't do

Shopify Tax calculates and flags; it doesn't register you, and for new stores it doesn't file. Shopify's tax liability insights show a "Monitoring" status for states where your sales reach "at least 80% of that state's threshold for economic nexus," including marketplace transactions where state law requires it. But "you must first register for sales tax with the state's tax authority to receive a permit," and Shopify says "it's your responsibility to determine where you need to charge and to remit taxes."

Filing is now on you: Shopify says automated filing is closed to new enrollment, so new stores file and remit returns themselves or through a provider.

On pricing, Shopify Tax is free until your store reaches a sales threshold of US$100,000. For stores created before 13 May 2026 that's an annual threshold; for stores created on or after that date it's a lifetime threshold. After that, the fee is 0.35% in the US on Basic, Grow or Advanced (0.25% on Plus), and 0.25% for the EU, UK and Canada (0.15% on Plus), "capped at $0.99 USD" per order.

For the EU, Shopify's reference page says you can collect VAT on orders of €150 or less at checkout using IOSS, and that "using OSS and IOSS at the same time isn't supported."

A sensible order of operations

Most stores can work through this in order, adding markets as sales justify the paperwork.

1. Map where you ship from. Stock in a UK 3PL, an EU warehouse or a US state changes the rules more than your company's location does.
2. Pull 12 months of sales by destination. Split by US state, UK, EU country and Australia, and separate marketplace sales from direct sales.
3. Test each threshold on its official page. Use the state's own page for the US, not a vendor's chart.
4. Register before you collect. Collecting tax without a registration creates its own problems.
5. Set up checkout. UK VAT for £135 and under, IOSS for EU parcels of €150 or less, GST for Australia once registered.
6. Book a filing calendar. IOSS returns are monthly, OSS quarterly, and US states vary.

If you're weighing a US company to simplify this, read setting up a US LLC as a non-US founder first: a US entity can create physical nexus where it holds stock or staff. If you run your store from Bali, the destination rules above apply just the same; for local founder events see Bali Startup & Tech.

Common mistakes

The costliest mistake is assuming you're too small to owe tax anywhere, when the UK and EU taxes on imported parcels start from the first sale. Others to avoid:

• Quoting the €10,000 threshold as a non-EU seller. It covers intra-EU sales by sellers established in one EU country, not imported goods.
• Thinking IOSS removes all EU charges. The €3 per-item customs duty applies whatever VAT scheme you use, from 1 July 2026.
• Ignoring marketplace sales in nexus tests. California and New York both count facilitated sales towards your threshold.
• Trusting one chart for every state. The Streamlined board's chart is dated January 2023; confirm on the state's own page.
• Assuming Shopify files for you. Automated filing is closed to new enrolment, and you must register with each state yourself.
• Shipping to UK customers over £135 without warning them. Above £135, import VAT and customs are collected on arrival.
• Holding stock abroad without registering. Goods of any value in the UK at the point of sale mean you must register for UK VAT.

To compare notes with other founders selling across borders, join Remote Builders (it's free). For ecommerce-specific groups, see our guide to communities for ecommerce founders.