How to account for foreign sales in e-commerce?

While selling products to other countries can run smoothly, international accounting requires specific knowledge and good organization. Proper VAT accounting is not only a matter of regulatory compliance, but also a factor that can significantly impact a company’s cash flow and provide peace of mind to the entrepreneur.

In this article, we present the key topics that everyone planning or already conducting international online sales should be familiar with. You will learn:

• what VAT rules apply to transactions within the European Union,
• when and how it is beneficial to use the VAT OSS system,
• how to account for sales outside the EU,
• what obligations apply to sellers operating on marketplace platforms,
• and which mistakes to avoid to streamline your daily work with documents and declarations.

So let’s get down to business – because well-organized knowledge is the first step to borderless sales freedom.

Understanding the basics: what is foreign sales in e-commerce?

Before diving into regulations and accounting systems, it’s worth understanding what foreign sales actually mean in the context of e-commerce.

It’s more than just shipping a package abroad — it’s an entire process that affects logistics, customer service, and most importantly, the accounting of foreign sales and tax obligations.

B2B or B2C – why does it matter?
In the world of e-commerce, foreign transactions are generally divided into two types:

➜ B2B – sales between companies (business to business),
➜ B2C – sales to individual customers (business to consumer).

The difference between them is highly significant, especially when it comes to international accounting and VAT settlement methods.

In the case of B2B, the key factor is whether the foreign partner has an active EU VAT number — in that case, a 0% VAT rate may be applied. For B2C, the process looks different and often involves charging tax based on the recipient country’s rules. More on that in a moment.

When does a sale become “foreign”?

E-commerce sales are considered foreign when goods (or services) are delivered to a customer located outside the seller’s home country.

It doesn’t matter whether the customer is in Germany, France, or the USA — what counts is the place of delivery and the country where the consumer (or business) ultimately receives the goods.

For tax and customs authorities, this is a crucial starting point for determining tax obligations — and this is where things start to get complicated, namely the accounting of foreign sales in accordance with applicable regulations.

Where do Polish online stores sell most often?

When it comes to international expansion, Polish entrepreneurs most frequently target European Union markets — primarily Germany, the Czech Republic, France, Romania, and Italy. These are destinations with high purchasing potential and relatively simple logistics.

Some companies also expand beyond the EU — to the United Kingdom, Norway, or the United States. In such cases, international accounting requires additional steps, such as customs office export confirmation or VAT registration in the destination country.

But don’t worry — each of these scenarios will be covered in the following sections.

VAT regulations in the EU – how does VAT work in international sales?

When selling products to other European Union countries, we enter a single market — but that doesn’t mean everything works the same way.

Although the Union has harmonized VAT regulations, each country has its own rates and certain differences in how specific procedures are handled.

That’s why accounting for foreign sales requires not only an understanding of general principles but also awareness of these local differences.

VAT in the EU – common rules, local differences

At a general level, the European Union operates under a unified VAT system, which means that goods and services moving between member states are not subject to customs duties, and taxes are settled under established frameworks.
In practice, however, each country has the right to set its own VAT rates, thresholds, and procedures — and these differences are exactly what make international accounting a significant challenge.

In one case, you may apply your domestic VAT rate, in another, you must charge the rate applicable in the customer’s country. And sometimes… you don’t charge VAT at all.

When to apply the domestic rate, and when 0% VAT?

The applicable VAT rate depends on several factors: the type of customer (business or consumer), the place of delivery, and whether the annual distance selling threshold has been exceeded (more on that in the next section).

The general rule is:

• B2B sales (business → business): if your customer from another EU country provides a valid EU VAT number, you may apply 0% VAT. The condition? The goods must physically leave Poland, and you must document it.
• B2C sales (business → consumer): in this case, VAT rates applicable in the customer’s country are usually applied. Up to a certain threshold, you can still operate under domestic rules, but once it’s exceeded, you need to change the settlement method or use the VAT OSS — more on that shortly.

In short: the accounting of foreign sales depends on whom you are selling to and where your product is delivered.

EU VAT number – a small but important detail

For B2B sales, the buyer’s EU VAT number is essential. It’s what allows you to apply the 0% VAT rate. The number must be active and listed in the EU VIES database.

It’s worth checking it online before every transaction — it takes just a few seconds and can save you a lot of stress and misunderstandings with the tax office.

Additionally, if you want to report 0% VAT in your declaration, you must have proof that the goods actually left the country — transport invoices, shipping documents, delivery confirmations.

That’s why well-organized international accounting is so important — well-maintained documentation is your best shield during a potential audit.

B2C sales in the EU: thresholds, obligations, settlement options

Selling to individual customers from other European Union countries (so-called B2C) is a natural growth path for many e-commerce stores.

A customer from Germany or Italy can order a product from Poland just as easily as from a local shop.

However, in B2C transactions, it’s not just language or logistics that matter — the rules governing the accounting of foreign sales become crucial. And these are governed by quite specific regulations.

The 10,000 euro threshold – what is it and why does it matter?

Before we discuss how to handle VAT, it’s important to understand the so-called distance selling threshold, which is set at 10,000 euros per year (total for all EU cross-border B2C sales).

If your B2C revenues within the Union don’t exceed this limit, you can continue to settle VAT according to the rules of the country where your business is established (e.g., Poland).

But if you exceed this threshold — even by a few euros — you must apply VAT rates applicable in the countries you sell to. And this is where several options come into play.

Three ways to settle VAT in B2C transactions within the EU

VAT settlement in the country of business operation (up to the 10,000 euro threshold)
If your annual foreign sales do not exceed 10,000 euros, you can stick with your current model — settle VAT as if you were selling only in Poland.

Simple, with no additional formalities. But caution — it’s worth monitoring your revenues, because exceeding the threshold means you must quickly change your approach.

VAT registration in the consumer’s country
The second — and more demanding — option is to register for VAT in each country you sell to. This solution may be necessary if you do not want to use the VAT OSS or sell products subject to specific local regulations.

The downside of this method is the high volume of formalities, varying rates, and different declarations — in short, quite complex international accounting.

VAT OSS – convenient settlement from one place
The most frequently chosen (and recommended) solution is VAT OSS, or One Stop Shop. This is an EU system that allows you to account for all B2C transactions with EU countries in a single declaration, submitted in the country where your business is based — for Polish companies, that’s Poland.

Thanks to VAT OSS, you don’t have to register separately in each EU country where you sell. You just need to sign up for the OSS system at your local tax office and then settle foreign VAT quarterly — using the VAT rates of the consumer’s country, but in a consolidated and convenient way.

It’s a huge convenience for e-commerce stores — both administratively and operationally. And if your international accounting is well implemented, this system can save you a great deal of time and stress.

VAT OSS system – everything you need to know

If you sell products online to customers in other EU countries, chances are you’ll hear about VAT OSS sooner or later.

And that’s a good thing — because this system can truly simplify life for anyone involved in cross-border sales. But let’s start from the beginning.

What is VAT OSS?

VAT OSS, or One Stop Shop, is a special settlement system created by the European Union. Its main goal is to simplify VAT settlements for B2C sales to other member states.

Instead of registering separately in every country where you have customers, you only need to register in your own country — and that’s where you submit a single, consolidated VAT declaration covering all your foreign sales.

VAT OSS operates on a quarterly reporting basis, and the tax is calculated using the VAT rates applicable in the consumer’s country. Importantly – the declaration is submitted in your own country (e.g., Poland), but VAT is settled for the entire European Union.

When is it worth (or necessary) to use it?

You can opt into VAT OSS voluntarily, but in many cases, it’s simply the most cost-effective option.

If you’ve exceeded the 10,000 euro annual threshold for B2C sales to other EU countries (i.e., the previously mentioned distance selling limit), you have two options: register for VAT in each consumer’s country or join the OSS system.

In practice, the more European markets you serve, the more VAT OSS becomes a must-have tool. It’s not just convenient — it’s a real asset in the day-to-day management of foreign sales reporting.

How to register and how does it work?

Registration for the VAT OSS system in Poland is done through the Electronic Tax and Customs Services Platform (PUESC). You simply submit an application and choose the so-called Union scheme. Once accepted, you can start reporting your foreign sales using a single quarterly declaration.

In the declaration, you include:

✔ the value of sales to individual countries,
✔ the applicable VAT rates,
✔ the total amount of tax due.

You pay the tax to the Polish tax office, which then distributes it to the appropriate member states.

Sales outside the EU – export and the 0% VAT rate

Expanding e-commerce operations beyond the European Union is a move that can significantly boost a company’s sales potential. Customers from the United Kingdom, Norway, or the United States are increasingly ordering goods from European sellers — and are more and more willing to shop online at Polish stores. However, before you ship a package abroad, it’s important to understand how foreign sales are accounted for in the context of export, and what must be done to benefit from the preferential 0% VAT rate.

Export of goods – how is VAT accounted for outside the EU?

When selling to countries outside the European Union, this is classified as goods export. This means that EU settlement systems like VAT OSS do not apply, and the sale is subject to different rules than intra-EU transactions.

The good news for sellers is that exports can benefit from the 0% VAT rate. This means that when issuing an invoice to a non-EU customer, you don’t add VAT — provided you meet specific documentation requirements.

When can the 0% VAT rate be applied?

To apply the 0% VAT rate for exports, two main conditions must be met:

1. The goods must physically leave the territory of the European Union.
2. The seller must have documents confirming the export.

This is not a discretionary matter — the regulations clearly state that a lack of proper documentation means you must apply the domestic VAT rate, even if the goods were actually delivered outside the EU. That’s why international accounting in this context demands high accuracy and good organization.

What documents are needed to apply the 0% VAT rate?

To document an export, specific confirmations from customs and transport systems must be collected. The most important include:

➜ A document confirming the export of goods outside the EU – most commonly in the form of the IE-599 message, issued by the customs system after the export procedure is completed.
➜ A shipping document or confirmation of dispatch – from the courier or transport company.
➜ Proof of payment from the customer – e.g., a bank transfer confirmation or verified card transaction.

Having these documents is not just a formality — it’s your safeguard in the event of an audit and the foundation for correct foreign sales accounting.

It’s also important to remember that these documents must be stored for a specified period (usually 5 years) and remain easily accessible to your accounting team or tax authorities.

Export and tax obligations – what else should you watch out for?

Although sales outside the EU are not subject to VAT under the same rules as within the Union, they still require precise record-keeping. In particular:

• issuing an invoice marked “export of goods” and applying the 0% VAT rate,
• reporting the transaction in your VAT declaration and JPK_V7 register as a supply taxed at 0%,
• obtaining documents confirming the export of goods outside the EU – no later than two months from the date of dispatch. If such documents are not obtained, a correction must be made and the domestic VAT rate.

Sales through marketplace platforms – specifics and challenges

For many e-commerce businesses, selling via platforms like Amazon, eBay, or Zalando is a natural step in international expansion. Marketplaces provide access to a vast customer base, ready-to-use logistics, and payment systems — but at the same time… they introduce considerable complexity when it comes to accounting for foreign sales. Especially in the context of VAT.

Who is responsible for VAT: the seller or the marketplace?

This is one of the most frequently asked questions, and the answer is: it depends. In some cases, the obligation to charge and remit VAT is taken over by the platform; in others — it still rests with the seller.

Since July 1, 2021, under the EU e-commerce package, new rules have been introduced stating that:

➜ For B2C sales within the EU valued under 150 euros, if the transaction occurs through a marketplace, the platform is considered the “seller” for VAT purposes — and it is responsible for the settlement.
➜ In the case of higher-volume sales or sales outside the EU, it is often you, the seller, who remains responsible for VAT — and you need to know where, when, and how to report it.

Conclusion? Selling through a marketplace doesn’t always relieve you of tax obligations. Sometimes, it actually complicates them.

Amazon, eBay, Zalando – what does it look like in practice?

Each marketplace operates a little differently:

• Amazon often requires VAT registration in countries where goods are stored (e.g., Germany, France, Czech Republic), which automatically involves you in local regulations. Furthermore, if you use the FBA program (Fulfillment by Amazon), you may be obligated to register in multiple countries simultaneously.
• eBay has introduced automatic VAT calculation in selected cases (e.g., B2C sales from outside the EU), but it doesn’t always take over this responsibility. For international shipments from your own warehouse (FBM model), the seller remains responsible for VAT — both for registration and settlement.
• Zalando operates as an intermediary platform and often handles VAT settlement itself, but still expects full compliance with local regulations from its sellers. This includes active VAT numbers, detailed reporting, and timely declaration submissions.

One thing is certain — to avoid complications, it’s essential to understand how each platform you work with operates.

That’s why international accounting for marketplace sales should be planned in advance and — ideally — supported by experienced professionals.

When is additional VAT registration required?

If your products are stored abroad – for example, in Amazon’s logistics center in Germany – the obligation to register for VAT in that country arises almost automatically.

The same applies when you exceed local B2C sales thresholds and do not use the simplified VAT OSS procedure.

It’s also important to note that not every transaction carried out through a marketplace qualifies for OSS. Therefore, it’s advisable to verify whether the platform:

• handles VAT settlement on behalf of sellers,
• requires you to register for local VAT,
• or can be managed under the VAT OSS

Differences between markets – what to watch out for?

Each country has its own approach to e-commerce and VAT:

➜ Germany and France are very meticulous, often requiring local VAT registration and detailed reporting.
➜ Italy enforces strict electronic invoicing rules.
➜ In Spain, it may be necessary to provide a local identification number (NIE) even for VAT registration.

All of this makes foreign sales settlement via marketplaces a process that demands flexibility, knowledge, and access to reliable information.

In practice – the more markets and platforms you serve, the more complex your international accounting becomes.

The most common mistakes and risks in international settlements

Expanding sales into foreign markets is a great business decision, but as with any strategy – the devil is in the details. More specifically: in the clauses, numbers, and deadlines.

Foreign sales accounting is an area where even a small mistake can lead to unpleasant consequences. In this section, we’ll look at the most common missteps and suggest how to avoid them.

Failure to register for VAT OSS despite exceeding the threshold

This is one of the most frequent mistakes, especially among companies that started with local sales and gradually began fulfilling more and more international orders. When annual B2C sales to other EU countries exceed the 10,000 euro threshold, VAT can no longer be settled solely under domestic rules.

In such a situation, the business has two options: register for VAT in every country where it has customers, or use the simplified VAT OSS system. Unfortunately, many companies fail to notice when they’ve crossed the threshold and continue selling without changing their VAT settlement model. This is a direct path to tax arrears, which can carry serious consequences.

Incorrect classification of transactions – B2B or B2C?

This is a trap that’s easy to fall into, especially during rapid growth in foreign sales. While it may seem like a minor detail, misclassifying a transaction as B2B or B2C can have serious consequences for the entire VAT accounting process.

➜ B2B transactions (business → business) within the EU may be eligible for the 0% VAT rate, provided the buyer has a valid EU VAT number and the transaction is properly documented.
➜ B2C transactions (business → consumer) typically require using the VAT rate applicable in the consumer’s country — unless the sale still falls under the threshold and is settled under the seller’s domestic rules.

Confusing these two types can lead to applying the wrong tax rate, errors in VAT declarations, and the need for corrections — and eventually, to paying overdue VAT with interest.

Errors in invoices and VAT declarations

An incorrect EU VAT number, wrong invoice date, inaccurate tax rate, or misidentified destination country — these are just a few of the most common mistakes in documenting international transactions.

And as we know, in dealings with tax authorities, accurate documentation is absolutely crucial. Errors in invoices can lead to serious consequences — such as losing the right to apply the 0% VAT rate for exports or discrepancies in declarations submitted under VAT OSS.

That’s why maintaining well-organized, transparent international accounting is essential — especially when you operate across multiple markets and the volume of documentation increases month by month.

Penalties and audits – consequences of oversights

Mistakes in tax reporting bring more than just the need for corrections. Depending on the scale and nature of the errors, they may result in:

• • assessment of unpaid taxes,
  • interest charges,
  • financial penalties,
  • and in extreme cases – a tax audit, which can significantly disrupt a company’s daily operations.

It’s worth noting that tax authorities in many EU countries (especially Germany and France) are very meticulous when it comes to VAT reporting. And if you’re operating under VAT OSS or are registered abroad, audits may be initiated not only by the Polish tax office but also by foreign tax administrations.

Practical tips: how to streamline foreign sales accounting

Now that you know how foreign sales accounting works and what obligations are involved in international trade, it’s time to get specific. How can you make your daily work easier? What can you do to stop VAT from keeping you up at night, and turn international accounting into a structured process rather than chaos? Here are some practical tips that can genuinely ease the burden on your team (or on you personally).

A good accounting system is essential

Start with the basics. If you’re planning to expand into international markets, your invoicing and accounting system should keep pace with your business. Look for tools that:

• support international settlements (including various VAT rates),
• generate reports useful for the VAT OSS system,
• enable issuing invoices in foreign languages and currencies,
• integrate with marketplaces and sales platforms.

VAT automation – fewer errors, more peace of mind

Manually entering invoice data or calculating taxes by hand? That might work for a few transactions, but not for hundreds of orders a month. If you’re serious about expansion, it’s worth investing in automation:

✔ tools that automatically calculate VAT rates based on the customer’s country,
✔ integrations with the VAT OSS system (e.g., via an external accounting office or API),
✔ alerts for exceeding the 10,000 euro threshold.

The more you automate, the less you risk errors — and foreign sales accounting becomes a repeatable, predictable process.

Tools and resources worth using

You don’t have to do everything from scratch. There are plenty of reliable sources that can help you stay on top of the topic:

➜ VIES (https://ec.europa.eu/taxation_customs/vies/) – EU VAT number verification
➜ Biznes.gov.pl (https://www.biznes.gov.pl/en) – up-to-date information on the VAT OSS system, EU procedures, and documentation
➜ PUESC portal (https://puesc.gov.pl/en/puesc) – VAT OSS registration and communication with the tax office

Summary

Foreign sales are not only a growth opportunity for e-commerce, but also a natural step in a company’s development. However, they come with specific obligations – especially tax-related ones. Proper preparation and knowledge of the regulations are essential to ensure that the accounting of foreign sales runs smoothly, legally, and – just as importantly – without unnecessary stress.

Key takeaways? Here’s what to remember:

• For B2C sales within the European Union, keep a close eye on the 10,000 euro threshold – once exceeded, it’s a good idea to use the VAT OSS system, which simplifies formalities.
• For exports outside the EU, the 0% VAT rate is possible – but only if you have the proper export documentation.
• Platforms like Amazon or eBay often take over part of the tax responsibilities, but not always – which is why it’s crucial to monitor who is responsible for VAT and where.
• Efficient, well-organized international accounting is not a luxury – it’s a necessity, especially if you’re operating in multiple markets at once.

To wrap up – a few practical tips:

✔ Invest in tools that automate settlements and organize data.
✔ Consult an expert – especially when expanding into new markets.
✔ Stay up to date with VAT regulations and updates – particularly in the countries where you sell regularly.

If you have any questions about foreign sales accounting, how VAT OSS works, or want to streamline your international accounting — contact us directly. We’re here to help.