Selling to UK consumers from an Estonian company

An Estonian company that sells to consumers in Great Britain can owe UK VAT. The EU One Stop Shop (OSS) does not cover those sales. This guide says when the company must register with HMRC (the UK tax authority), when it need not, how the UK return works under Making Tax Digital, and how the same sales go on the Estonian VAT return (KMD). It covers sales in Great Britain. Goods you send to Northern Ireland follow the EU rules for distance sales: see the OSS guide.

In short

• A business with no establishment in the UK has no UK registration threshold. It must register as soon as it makes a taxable supply in the UK, or expects one within 30 days. More
• Goods of £135 or less sent direct to consumers in Great Britain, goods held in the UK and sold direct, and digital services to UK consumers all need a UK VAT registration. More
• Sales through an online marketplace, and sales to a UK business that gives its UK VAT number, usually need none. More
• An EU business does not have to appoint a UK tax representative, but HMRC can ask for a security. More
• The UK return has 9 boxes in pounds, usually covers 3 months, and is due with the payment 1 calendar month and 7 days after the period ends. You submit it through Making Tax Digital software. More
• The same sales still go on the KMD by the Estonian rule, mostly at 0 percent. The UK VAT never goes on the KMD. More

When must an Estonian company register for UK VAT?

An Estonian company with no business establishment in the UK is a non-established taxable person (NETP) for HMRC. The UK registration threshold does not apply to it: it must register for taxable supplies of any value in the UK (VAT Notice 700/1, sections 3.1 and 9.1). It must register when it makes taxable sales in the UK or expects to make them in the next 30 days (VAT Notice 700/1, section 9.3).

These sales make an Estonian company register:

For goods of more than £135 sent from outside the UK, the normal VAT and customs rules apply when the goods enter Great Britain (HMRC: goods sold directly to customers in the UK). If you sell on terms where you import the goods and pay the import charges, check with HMRC whether you must register.

When is no UK VAT registration needed?

• Goods of £135 or less sold through an online marketplace. The marketplace is liable for the UK VAT on the sale (HMRC: goods sold using online marketplaces).
• Goods held in the UK and sold through an online marketplace. The marketplace accounts for the VAT on the sale to the customer. You are treated as making a zero-rated supply of the goods to the marketplace (a "deemed supply"). If you make only these supplies, you can either register for VAT or apply for exemption from registration. This does not cover a sale to a UK business that gives the marketplace its VAT number: then you stay liable for the VAT (HMRC: goods sold using online marketplaces).
• Goods of £135 or less sold to a UK business that gives you its UK VAT number. You charge no VAT, and the customer accounts for it on its own return (the reverse charge). You can write on the invoice, for example, "reverse charge: customer to account for VAT to HMRC" (HMRC: goods sold directly to customers in the UK).

How does an Estonian company register with HMRC?

You register as a non-established taxable person, and you must tell HMRC within 30 days of becoming liable (VAT Notice 700/1, section 9.3). You register online with HMRC, at your principal place of business outside the UK. A registered, serviced or virtual office in the UK alone does not make a UK establishment (VAT Notice 700/1, sections 9.2 and 9.4).

• No tax representative is required. An NETP may appoint a UK VAT representative (VAT Notice 700/1, section 9.4), but HMRC cannot direct a business based in a country with certain mutual assistance arrangements with the UK to appoint one (VAT Notice 700/1, section 10.3). HMRC's power to direct a representative applies to an NETP with no EU establishment (VATREG37400).
• HMRC can ask for a security. It can ask a business that is not established in the UK to pay a security for its VAT (VAT Notice 700/1, section 9.4; VATREG37400).

What is Making Tax Digital, and what is bridging software?

Making Tax Digital (MTD) for VAT requires every VAT-registered business to keep its VAT records digitally, in functional compatible software, unless HMRC grants an exemption (VAT Notice 700/22, sections 1.2, 2.1 and 3.1).

• Digital links. Data that moves from one program to another must move by a digital link. A CSV or XML export and import, or a download and upload of a file, counts. Copy and paste does not (VAT Notice 700/22, section 3.2.1).
• Bridging software is a digital tool that uses the MTD interfaces of HMRC. It takes the figures from your records, for example a file, and submits the return to HMRC (VAT Notice 700/22, section 3.2.3).

What does the UK VAT return hold, and when is it due?

You usually send a return every 3 months, your accounting period. The return and the payment must reach HMRC 1 calendar month and 7 days after the end of the period (GOV.UK: when to do a VAT Return; VAT Notice 700/12, section 5). A period that ends on 31 March is due on 7 May.

The return has 9 boxes (VAT Notice 700/12, sections 3.2 to 3.10):

Boxes 2, 8 and 9 are for movements of goods between Northern Ireland and the EU. A company that sells only in Great Britain enters 0 in them.

• Pounds only. An amount in euros is converted to pounds at the UK market selling rate at the time of the supply, or at the period rates HMRC publishes for customs. Once you adopt HMRC's period rates, you cannot change without HMRC's agreement (VAT Notice 700, section 7.6).
• Records. Keep the business records for VAT for at least 6 years (VAT Notice 700/21, section 2.4).

How to correct an error of an earlier return, and the late filing and late payment penalties, are set by HMRC. Check its guidance before you correct a filed return.

How do the same sales go on the Estonian VAT return (KMD)?

A UK registration does not change the Estonian rules. Each sale still goes on the KMD by Estonian law, and the UK VAT never does:

• No double tax. Only the UK charges VAT on the sale. The KMD shows it at 0 percent, or not at all for goods held in the UK.
• The UK VAT is not Estonian VAT. It is a debt to HMRC. Keep it on its own account in the books, never on the Estonian VAT accounts. UK VAT you pay on UK costs is reclaimed in box 4 of the UK return (VAT Notice 700/12, section 3.5), not on the KMD (VAT Act § 29 lg 3).
• Estonian input VAT stays deductible. Estonian VAT on costs used for these sales is deductible, because the Act allows the deduction for business carried out in a foreign state (VAT Act § 29 lg 1).

The line numbers are those of the KMD form in force until 31.12.2026. From 2027 the KMD becomes a data-based return (EMTA: the data-based VAT return from 2027). EMTA has not published guidance on a digital service under a UK registration in particular. If the amounts are large, confirm the KMD line with EMTA. For digital services to consumers in the EU, the rules are different: see the OSS guide.

What does Oscar do for a UK VAT registration?

Oscar offers UK VAT tracking as an add-on: it prepares the figures of each UK return. It costs €19 + VAT a month (€190 + VAT a year on the yearly plan) for each UK VAT registration, on top of the plan, from the next renewal of the plan.

What Oscar does:

• records your UK VAT registration, with its date, its number and its return periods;
• books your UK sales and UK costs on UK VAT codes, and keeps the UK VAT on its own account, apart from the Estonian VAT;
• works out the 9 boxes in pounds for each period, at HMRC's monthly period rates for amounts in another currency. So your company uses HMRC's period rates for its UK VAT. If it already uses another method with HMRC, tell us before the first return;
• has an accountant check that the figures of each return agree with your books, which we keep under Estonian law;
• gives you the return as a CSV file for your bridging software;
• warns you when the books show sales to UK consumers and the company has no UK VAT registration.

What Oscar does not do:

• Oscar does not file the UK return, does not pay HMRC, and does not deal with HMRC for you. You submit the return through your bridging software and pay the VAT, and you are responsible for both.
• Oscar gives no advice on UK tax law. The accountant's check covers the agreement of the figures with your books. For a question of UK law, such as whether you must register, ask HMRC or a UK tax adviser.

General information, not advice for your situation. The law as in force on 29.10.2026.