EU VAT for a non-EU software company: the OSS registration, the zero threshold and what it costs to file

Your software company is in the US, or Canada, or Singapore. Someone in Lyon signs up for the EUR 25 plan with a personal card. From that first payment, France expects 20% VAT on it, and nobody in France will tell you. There is no small-seller allowance for you: the EUR 10,000 threshold that lets small European sellers charge their home VAT only exists for businesses established in the EU. A non-EU company selling software to EU consumers owes the VAT of the customer's country on the first euro.

The EU made this bearable with the non-Union One Stop Shop (OSS): one registration in one country of your choice, one quarterly return for all 27, one payment. This piece goes through what it covers, how to register (we use Ireland as the example), the rate in every member state, the customer-location evidence you have to keep, why business customers are a different case, and what it costs at EUR 5,000 and EUR 50,000 a month: filing yourself against handing the whole thing to a merchant of record such as Paddle. Prices and rules were checked on 30 and 31 October 2026.

Which sales the EU taxes, and which it doesn't

SaaS, downloadable software, online courses run by software, hosting and similar services are "electronically supplied services" in EU law (Annex II of the VAT Directive and Article 7 of Implementing Regulation 282/2011). For those, the place of supply is where the customer is. What changes the answer is who the customer is:

Two things in that table save most small vendors a lot of work. First, business customers cost you nothing to remit: the buyer self-accounts in its own VAT return. Article 18 of the Implementing Regulation lets you treat a customer as a consumer unless they give you a VAT number, so the rule is simple: ask for the VAT ID at checkout, check it in the Commission's VIES service at the time of sale, keep the check, and leave VAT off. Second, the OSS only matters for the consumer side. A B2B tool with a handful of personal-card signups still has to register, but its returns will be small.

One edge: work you do by hand for an individual in the EU, such as a custom build or a consulting call, is not an electronically supplied service. For a supplier outside the EU, the general B2C rule puts the place of supply where the supplier is, so no EU VAT is due on it. The automated subscription is what the EU taxes.

The zero threshold, in the law's own terms

Article 59c of the VAT Directive gives a EUR 10,000 a year allowance for cross-border digital services and distance sales, below which the seller may charge its home VAT. It applies only to a supplier "established in only one Member State". A company with no business establishment or fixed establishment in the EU never qualifies, so it has no allowance at all. That is why US founders who read European blog posts about the "EUR 10k threshold" get this wrong: those posts are written for sellers based in the EU.

The penalty for waiting is not a fine you can calculate in advance; it is the VAT itself. If you never added VAT, the tax authorities treat your price as VAT-inclusive and the tax comes out of your revenue. For the 200-customer example below, a year of EUR 25 subscriptions sold to EU consumers without VAT leaves EUR 10,281 of VAT owed from money already in your bank, before each country's interest and penalties.

The rate in every EU country (1 January 2026)

SaaS takes the standard rate everywhere; the reduced rates in many countries cover books, food, hotels and the like, not software subscriptions. Recent changes to watch in old tables: Finland went to 25.5% in September 2024, Slovakia to 23% in January 2025, Estonia to 24% in July 2025 and Romania to 21% in August 2025.

Consumer prices in the EU are shown including VAT, so you have to decide whether the VAT sits on top of your price or inside it. If you show EUR 25 to everyone and absorb the difference, what you keep moves by more than 8% across the union:

Many SaaS companies charge a net price plus VAT, so the Hungarian customer pays EUR 31.75 and the German one EUR 29.75. Both are legal; just make sure the checkout shows the full amount before the customer pays.

Registering for the non-Union OSS, step by step

You can register in any member state, and change later (the change takes effect at the end of a calendar quarter). Ireland is a common choice for English-speaking founders: the portal and the guidance are in English and the return is in euros. Revenue's Tax and Duty Manual for the scheme (last revised June 2025) sets out the process:

Timing matters more than the form. Registration normally starts on the first day of the next calendar quarter. If you are already selling, the scheme can cover you from the first sale, but only if you tell your country of identification by the 10th day of the month after that first sale. Miss that, and Revenue's manual is blunt: you have to register and account for VAT in every member state of consumption directly for the period before the scheme starts. A company that launched in Europe on 3 November should register before 10 December.

No fiscal representative, no EU bank account and no EU company are needed for the non-Union scheme.

The quarterly return and payment

The deadlines do not move for weekends or holidays, you cannot file before the quarter ends, and you file a nil return in a quarter with no EU consumer sales. For each country you sold into, the return lists the sales excluding VAT, the rate and the VAT due. Sales in dollars are converted at the European Central Bank rate on the last day of the quarter. Payment reaches the country of identification by the same deadline, quoting the return's reference number; Ireland sends a reminder on the tenth day after a missed deadline. You cannot amend a filed return; corrections go into a later return, for up to three years.

Here is what the return looks like for a quarter at EUR 5,000 a month, with the customer mix used in the cost example further down (a EUR 25 plan, price before VAT, 200 subscribers):

At EUR 50,000 a month with the same mix, the quarterly payment is EUR 31,050. The return has the same eight lines; only the numbers grow. That is the real argument for doing it yourself at scale: the work does not grow with revenue.

If you get excluded, it is for persistent lapses: three consecutive quarters of reminders without filing within 10 days, or three of reminders without paying in full (unpaid amounts under EUR 100 a quarter don't count). An excluded seller has to register in each country separately, so treat the deadline as fixed.

Proving where each customer is

For digital services the law presumes the customer is where two pieces of non-contradictory evidence put them (Article 24b of Regulation 282/2011). The evidence list in Article 24f:

In practice: billing address plus card country agree, or billing address plus IP. If they disagree (a German card, a French address), you need a third piece, such as the IP address, that settles it. Stripe Tax and most checkout tools record this for you, but only if you collect the address. Records must be kept for 10 years from the end of the year of the sale and handed over electronically on request: country, service, date, amount and currency, rate, VAT, payments, the invoice details and the location evidence.

What it costs: filing yourself against a merchant of record

A merchant of record (MoR) sells your software to the customer in its own name, so it is the seller for VAT and you never register. Paddle, Lemon Squeezy, Polar, Creem and Stripe's own Managed Payments work this way. Filing yourself means your Stripe account takes the money, Stripe Tax works out the rate and you (or a filer) send the OSS return. Published prices on 31 October 2026:

Fees are charged on what the customer pays, VAT included. For the worked example we used the same EUR 25 plan, VAT added on top (a blended 20.70%), monthly billing, all EU cards, no currency conversion, dollar fees at the ECB rate of 30 October 2026 (EUR 1 = USD 1.1172):

The surprise is the second line. For European customers paid into a US Stripe account, the 1.5% non-US card fee plus Billing and Stripe Tax brings the do-it-yourself route to 5.6% + 30c, the same money as Paddle's 5% + 50c. Our US sales tax article found the opposite for American customers, where going direct saved about 1.6 points of revenue: domestic cards carry no surcharge. So the answer depends on where your customers are. If you price in euros and take payouts in dollars, add 1% to every Stripe-based line.

The percentages hardly change between the two sizes because nearly every fee is a percentage. What changes is the fixed part: a filer's $145 a quarter is 0.9% of revenue at EUR 5,000 a month and 0.1% at EUR 50,000. For the tax step alone, Stripe Tax Basic plus four filed returns comes to about EUR 881 a year at the smaller size and EUR 4,140 at the larger one; the Tax Complete tier 1 plan ($90 a month, 200 transactions and four filings included) is EUR 967 a year, but at 2,000 monthly charges you would need tier 2 plus overage, about EUR 9,774.

Creem's low line comes from its own pricing page, which states no international card fee; it is a younger company than Paddle, so weigh that. The numbers leave out chargeback fees, refunds and payout fees, which differ by route.

Which route fits

The two can mix: some companies keep business customers on their own Stripe account with reverse-charge invoices and send self-serve consumer checkouts through an MoR. If you do that, the MoR's sales stay off your OSS return (it was the seller), and your own consumer sales, even a few, still need the registration.

A checklist for the week you decide

Adding VAT on top of the price is, for a consumer, a price rise of about a fifth. Before you switch the checkout, see how many customers you can lose before it stops paying for itself, and if you sell into the US as well, our article on sales tax on software subscriptions covers the state side with its own cost comparison. Moving to a merchant of record also changes who handles card disputes; our chargebacks piece has the fees for each route.

This is a practical summary of public rules and prices, not tax advice for your company; for back periods and anything unusual, talk to a VAT adviser in your chosen country of identification.

Sources

Rules: European Commission, OSS registration, declaring and paying and record keeping; VAT Directive 2006/112/EC (Articles 58, 59c, 196, Annex II); Implementing Regulation 282/2011 (Articles 7, 18, 24b, 24f, 63c); Irish Revenue, non-Union scheme and Tax and Duty Manual: Non-Union Scheme (revised June 2025); VIES VAT number check. Rates: VATupdate EU rates table (as of 1 January 2026), European Commission on VAT rates. Prices (31 October 2026): Paddle, Lemon Squeezy fees, Polar, Creem, Stripe Managed Payments pricing and how it works, Stripe Tax pricing and Tax Basic and Complete explained, Stripe US pricing; ECB euro reference rates (USD 1.1172 on 30 October 2026). The worked example is our own arithmetic on these prices.