The European Union (EU) manages a harmonized value-added tax (VAT) system across 27 member states. Within this shared framework of common rules and principles, each country sets its own VAT rates, registration thresholds, and invoicing requirements.

As marketplaces continue to grow and account for online sales to EU customers across industries, the European Union has developed new measures to modernize and simplify tax compliance. Businesses operating in the region need to maintain compliance with EU-level VAT law and adhere to nuanced country-based regulation during cross-border sales to avoid penalties and remain compliant.

This guide is for both marketplaces and businesses that sell products through marketplaces into the EU. You’ll learn who is responsible for collecting and remitting VAT, and how to discern your obligations and liability based on evolving regulations and industry-based nuances.

Defining the relevant terms

The language used in EU VAT law to describe marketplace operators varies, sometimes referring to them as “platforms” or “electronic interfaces or portals.” In the EU, only some of these marketplace operators are liable to collect VAT. Marketplace operators that need to collect VAT on sales they facilitate are described as “deemed sellers” because they are “deemed” to be selling goods and services to the customer.

VAT law imagines these transactions through a deemed seller as two sales taking place consecutively. The seller supplies goods or services to the marketplace operator, who then supplies the goods or services to the customer—even if the marketplace operator never had the goods in its possession.

Marketing operators that don’t need to collect VAT are called “intermediaries.” They provide intermediary services without conducting the transaction. In this case, the intermediary isn’t responsible for collecting any tax on behalf of the seller. Collecting and remitting VAT is the seller’s responsibility.

Determining the tax liability of a marketplace operator

In the EU, marketplace operators are only ever responsible for collecting VAT, not other kinds of taxes and fees. Their liability to collect VAT depends on the other responsibilities marketplace operators take to facilitate the sale and fulfill the purchase. Although tax authorities in different countries in the EU can have different interpretations, these characteristics might indicate that a marketplace operator is a deemed seller and needs to take responsibility for collecting VAT:

• Taking responsibility for the actual delivery of the good or service
  
• Taking responsibility for collecting payment
  
• Controlling or exerting influence over pricing
  
• Providing customer support services regarding products sold or services provided
  
• Prioritizing the brand and identity of the marketplace operator more prominently than the seller
  

If the contract between a marketplace operator and a seller contradicts the economic reality of how the transaction operates, the latter is the benchmark to use for determining its tax compliance responsibilities. This list is not exhaustive, and a marketplace operator doesn’t have to fulfill all the criteria to have tax liability.

Industry-specific VAT laws for marketplaces

Digital services and B2C sales of goods

The EU has mandatory deemed seller rules for certain types of transactions. Marketplaces that authorize the charges or the deliveries, or set the terms and conditions of the sale, are always beholden to collect VAT if they’re selling these products or services:

• Digital services
  
• Business-to-consumer (B2C) goods imported from outside the EU through consignment worth less than €150
  
• B2C goods within the EU performed by a non-EU merchant
  

However, the law explicitly states that the mandatory deemed seller rule does not apply to businesses that only perform specific tasks: processing payments related to the supply of goods; listing or advertising goods; or redirecting or transferring customers to other electronic interfaces where goods are offered for sale without further intervention.

Marketplace operators that facilitate the sales of nondigital services, including food delivery or other delivery services, or other kinds of goods not included above might still be beholden to sell VAT if they meet the general requirements of a deemed seller.

Short-term accommodation and passenger transport

If approved by all EU member states, the VAT in the Digital Age (ViDA) legislation on marketplaces will extend the mandatory deemed seller rule to include short-term accommodation rental and car transport in 2027. Marketplace operators that match the definition of deemed sellers and facilitate these sales will be liable to collect VAT.

There’s one exception: in the accommodation and transportation industries, VAT-registered businesses that supply marketplace operators with their VAT identification numbers are beholden to collect VAT. Marketplace operators have no tax liability in these instances.

Voluntary tax collection obligations

In the EU, marketplace operators cannot enter a voluntary agreement with the tax administration to collect VAT on marketplace-facilitated sales if they don’t fit the definition of a deemed seller. If marketplace operators are unclear about whether they function as deemed sellers, they can check local regulations in each EU country or reach out to a local tax advisor.

Tax reporting obligations

Any marketplace operator that’s liable to collect VAT as a deemed seller must report all sales to the tax administration of each individual country they’re operating in within the EU. They do not need to distinguish these marketplace-operator sales from direct sales. Recent legislation from 2023 called DAC7 also requires that marketplace operators (whether they’re deemed sellers or intermediaries) collect, validate, store, and report information about sellers that sell goods, rent immovable property, rent any mode of transport, or facilitate the provision of personal services to a customer through their marketplace.

Liability for incorrectly calculated tax

EU law states that marketplace operators are not liable for collecting and remitting incorrect VAT if their mistakes were a byproduct of inaccurate information. If a marketplace operator can prove that its team was dependent on incorrect information supplied by a seller or third party, and demonstrate that it could not have reasonably known the information was incorrect, the marketplace operator is not liable for uncollected VAT.

Invoicing considerations

When marketplace operators act as deemed sellers, EU VAT legislation views one sale as two separate transactions: the seller to the deemed seller, and then the deemed seller to the customer. In the EU, business-to-business (B2B) sales generally require invoices, but they’re not required for B2C sales.

The seller needs to issue an invoice to the marketplace operator for the first transaction. Self-billing—when the marketplace operator issues an invoice on behalf of the seller to itself—is a popular approach. The second transaction does not require an invoice if it’s B2C. However, if the marketplace operator is selling to a business, an invoice is required for that transaction as well.

Marketplace sellers

Tax registration

If a business based outside the EU sells its goods or services exclusively via marketplaces and the marketplace operator functions as a deemed seller, the business does not need to register for VAT. For example, a US-based business that sells low-value household items to EU customers exclusively through marketplaces is not necessarily beholden to register for VAT. Regulations would interpret this as two transactions: the US-based business sells the goods to the marketplace operator outside of the EU, which is not subject to VAT, and then the marketplace operator sells the goods to the EU customer and must charge VAT.

Tax collection obligation

Businesses are not responsible for collecting VAT when making a sale through a deemed seller to customers in the EU. They can discern whether the marketplace facilitator is a deemed seller based on the marketplace’s terms and conditions.

Tax liability

The seller is generally not liable for any VAT that the marketplace operator fails to calculate or remit, although the seller is responsible for submitting the correct details about the sale to the marketplace operator. However, some countries have implemented joint and several liability laws. Under these laws, a marketplace seller may be held liable for any VAT that the marketplace operator fails to remit. Third-party liability laws also vary across EU member states, and businesses benefit from looking into local regulations.

Tax reporting obligations

If a marketplace operator is required to collect VAT on sales to customers, the seller is not responsible to include these sales in their tax return. However, marketplace sellers might need to report their exempt or zero-rated sales to the marketplace operator in their tax returns.

How Stripe can help

Stripe empowers marketplaces to build and scale powerful global payments and financial services businesses with less overhead and more opportunities for growth. Stripe Tax reduces the complexity of global tax compliance so you can focus on growing your business. It automatically calculates and collects sales tax, VAT, and GST on both physical and digital goods and services in all US states and more than 40 countries. Stripe Tax is natively built into Stripe, so you can get started faster—no third-party integration or plug-ins are required.

Stripe Tax empowers platforms

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or by adding tax collection to Stripe no-code products, such as Invoicing, with the click of a button.
  
• Register to pay tax: Stripe Tax provides links to the websites where you can register once you meet a member state’s tax registration requirement.
  
• Automatically collect sales tax: Stripe Tax calculates and collects the amount of tax owed. It supports hundreds of products and services, and it is up-to-date on tax rule and rate changes.
  
• Simplify filing and remittance: Stripe generates itemized reporting and tax summaries for each filing location—helping you easily file and remit taxes on your own, with your accountant, or with a Stripe filing partner.
  

Learn more about Stripe Tax.