Navigating distance selling thresholds is essential for e-commerce brands shipping globally. These regulations not only specify when a business is required to register for a local tax ID, but also play a vital role in adhering to international tax laws, streamlining shipping operations, and accurately calculating landed cost. In this article, we’ll break down the complexities of varying types of sales thresholds, providing valuable insights on how to ensure compliance.
What are Distance Selling Thresholds?
Distance selling thresholds refer to specific limits set by countries on the value of goods sold remotely by non-resident businesses, typically through e-commerce transactions. When a brand exceeds this threshold in a particular market, they must register for VAT or GST and comply with local tax laws. These thresholds are established to regulate the fiscal obligations of companies engaging in cross-border sales and ensure fair competition among local and foreign businesses.
Low-Value Goods:
Oftentimes, VAT registration thresholds take into account low-value goods (LVGs), which are items priced below a certain value. The definition of “low value” varies from country to country, with each setting its own monetary limit. LVGs are significant because they’re often subject to specific tax rules and exemptions designed to streamline and encourage international trade. For example, in countries like Australia and New Zealand, value-added taxes are not collected on imports of low-value goods unless the cumulative distance selling threshold is surpassed.
Value-Added Tax Registration Requirements
Being aware of VAT registration requirements is crucial for US e-commerce brands selling products internationally. If your company exceeds a distance selling threshold, you may be required to register for taxes in that market. This process involves charging VAT on eligible transactions to consumers located within the country as well as regularly reporting and remitting the collected VAT to local tax authorities.
Precise regulations, sales thresholds, and tax rates can differ significantly between countries. We’ve put together this table to help you keep track of top global markets that enforce distance selling thresholds.
Distance Selling Thresholds for VAT Registration:
(AU)
(CA)
(EU)
(MY)
(NZ)
(NO)
(SG)
(CH)
(UK)
13–15% HST
(varies by province)
(≈21% avg)
/ 2.6% reduced
(annual sales)
(annual sales)
(LVG sales)
(annual sales)
(LVG sales)
(local)
+ $1M SGD
(global)
$150 CAD (duty)
(per item)
Official Distance Selling Registration Portals by Country
-
Australia (AU):
ATO.gov.au GST Page -
Canada (CA):
Canada Revenue Agency (CRA) Portal -
European Union (EU):
EU IOSS Compliance Guide -
Malaysia (MY):
Royal Malaysian Customs SST Page -
New Zealand (NZ):
NZ Inland Revenue Overseas Sellers -
Norway (NO):
Norway VOEC Registration -
Singapore (SG):
IRAS Singapore OVR Rules -
Switzerland (CH):
Swiss Federal Tax Administration -
United Kingdom (UK):
HMRC VAT Import Rules
Strategies for International VAT Compliance
Managing VAT registration, de minimis thresholds, and ongoing VAT compliance across multiple countries can be complex for US ecommerce brands selling internationally. Each market has different rules that determine when you must register for VAT, how taxes are applied, and whether low-value goods fall below a de minimis threshold.
Passport goes beyond shipping. We understand distance selling thresholds, VAT registration requirements, and the compliance complexity that comes with selling across borders. Where a typical carrier stops at the label, we bring the tax infrastructure, regulatory knowledge, and operational tools brands need to grow internationally—without the friction.
That’s why we created Passport Seller of Record® (SOR) – an easier way to handle VAT compliance with a quick and seamless enrollment process. Through the SOR program, businesses utilize Passport’s tax IDs to clear shipments, avoiding the need for complex registrations and filings. As a merchant, you’ll simply collect VAT at checkout, and we’ll manage the rest, including tax returns with the proper authorities and even monitoring sales thresholds.
Passport currently provides SOR solutions in the following markets:
- European Union (EU)
- United Kingdom (UK)
- Australia (AU)
- New Zealand (NZ)
- Norway (NO)
- Singapore (SG)
- Switzerland (CH)
For countries outside of these offerings, our in-house compliance experts are ready to help guide you through any challenging regulations and get your products to customers around the world. If you’re interested in Passport’s Seller of Record program or have additional questions about registering for VAT, reach out to us here.
Authored by Thomas Taggart
Head of Global Trade | Passport
Thomas Taggart is a cross-border commerce leader with more than 20 years of experience in international shipping and regulatory affairs. As the Head of Global Trade, Thomas helps ecommerce brands go global by simplifying international trade, tax, and product compliance issues. Prior to Passport, he brought international shipping solutions to market through multiple roles in UPS’s product development organization.
Frequently Asked Questions
What is a distance selling threshold?
A distance selling threshold is the sales amount at which a business selling internationally must register for VAT in a specific country. Once this threshold is exceeded, the business is required to collect VAT at checkout and comply with local VAT regulations, including reporting and remittance.
What is a VAT threshold?
A VAT threshold is the level of sales in a country that triggers the requirement to register for VAT and begin VAT compliance. After exceeding the threshold, businesses must collect, report, and remit VAT on eligible transactions.
What is a de minimis threshold?
A de minimis threshold is the value below which imported goods are exempt from duties or taxes in a specific country.This threshold applies to individual shipments and varies by country, making it important for ecommerce brands to understand de minimis by country when calculating landed cost and tax obligations.
Do US companies need to register for VAT?
Yes, US companies may need to register for VAT in foreign markets if they exceed a country’s VAT threshold or are required to collect VAT at the point of sale.
Requirements vary by country and may apply even without a physical presence.
Is GST the same as VAT?
Yes, GST and VAT are both consumption taxes applied to goods and services.
“VAT” is commonly used in Europe, while countries like Australia and New Zealand use the term “GST,” with differences based on local tax rules, rates, and registration requirements.
What is the GST threshold in Australia?
In Australia, businesses must register for GST when their annual sales exceed $75,000 AUD.
Once registered, GST must be collected on applicable sales, including low-value goods sold to Australian consumers.
What is the GST/HST threshold in Canada?
In Canada, businesses must generally register for GST/HST when their sales exceed $30,000 CAD in a 12-month period.
This can apply to non-resident ecommerce sellers under simplified registration rules, depending on how goods are sold and delivered.
What is the VAT threshold in the EU?
The EU has a €0 VAT threshold for imports, meaning VAT applies from the first sale.
For orders up to €150, businesses can use the IOSS system to collect and remit VAT at checkout.
What is the SST threshold in Malaysia?
In Malaysia, businesses must register for SST when they exceed RM 500,000 in annual sales of low-value goods.
Once registered, SST must be collected at the point of sale for applicable transactions.
What is the GST threshold in New Zealand?
In New Zealand, businesses must register for GST when their annual sales exceed $60,000 NZD.
GST must then be collected on applicable goods, including low-value imports.
What is the VAT threshold in Norway?
In Norway, businesses must register for VAT (VOEC) when sales of low-value goods exceed NOK 50,000 in a 12-month period.
Low-value goods are items valued under NOK 3,000 per item and are subject to VAT collection at checkout once registered.
What is the GST threshold in Singapore?
In Singapore, businesses must register for GST if they exceed $100,000 SGD in local sales and $1M SGD globally.
Under the Overseas Vendor Registration (OVR) regime, GST applies to low-value goods sold to Singapore consumers.
What is the VAT threshold in Switzerland?
In Switzerland, businesses must register for VAT when their global revenue exceeds CHF 100,000.
VAT applies if the calculated tax amount exceeds CHF 5 on imported goods.
What is the VAT threshold in the UK?
The UK has a £0 VAT threshold for imports, meaning VAT applies to all goods sold to UK consumers.
For orders £135 or less, businesses must collect VAT at checkout. For higher-value goods, VAT is typically collected at import.