Handling taxes when selling to the UK and EU can be a bit complex, but I'll try to provide a detailed answer with examples and references to help you understand the process.

1. Selling to the UK: When selling to the UK, you need to consider Value Added Tax (VAT). As a non-UK seller, you are not required to charge VAT on your sales unless you exceed the UK's VAT registration threshold, which is currently £85,000 in annual turnover. If you are below this threshold, you can make it clear to your customers that you are not collecting VAT, and they will be responsible for paying VAT and any customs/import fees when the goods arrive in the UK.

Example: Let's say you sell a product to a customer in the UK for $100. You do not charge VAT on this sale. When the product arrives in the UK, the customer may have to pay 20% VAT on the value of the goods, which would be £20 in this case.

2. Selling to the EU: When selling to the EU, the rules recently changed due to the implementation of the EU VAT e-commerce package from July 1, 2021. Now, non-EU sellers are required to charge VAT based on the customer's location for most sales, regardless of the sales volume.

a) Distance Selling Thresholds: Before the new rules, there were distance selling thresholds that allowed you to sell below a certain threshold without charging VAT in each EU country. However, these thresholds have been abolished, and you are required to charge VAT from the first sale in each EU country.

Example: Let's say you sell a product to a customer in Germany for $100. You need to charge German VAT on this sale, which is currently 19%. So, the customer would pay $100 + 19% VAT, totaling $119.

b) Import One Stop Shop (IOSS): To simplify the VAT process for low-value goods (below €150), you can opt to use the Import One Stop Shop (IOSS) scheme. This allows you to collect and remit VAT at the point of sale, making it easier for customers to receive their goods without additional fees upon delivery.

Example: If you use IOSS and sell a product to a customer in France for $100, you would charge French VAT (currently 20%) at the point of sale. So, the customer would pay $100 + 20% VAT, totaling $120. You would then declare and remit the VAT to the French tax authorities using the IOSS.

It's important to note that these examples are simplified and do not consider other factors like specific goods, exemptions, or different VAT rates in each country. Therefore, it's advisable to consult with a tax professional or use specialized software to ensure compliance with VAT regulations.

References:

• UK VAT registration threshold: https://www.gov.uk/vat-registration-thresholds
• EU VAT e-commerce package: https://ec.europa.eu/taxation_customs/business/vat/vat-e-commerce_en
• IOSS information: https://ec.europa.eu/taxation_customs/business/vat/vat-e-commerce/import-one-stop-shop_en