Value Added Tax (VAT) is a common source of confusion for dropshipping and print-on-demand sellers, especially when selling internationally. This article covers two things: what BrandSKU handles on your behalf, and what you may still need to do as a seller. As always, we strongly recommend consulting a professional tax advisor for advice specific to your business — BrandSKU cannot provide individual tax guidance.
What BrandSKU Handles
BrandSKU collects VAT automatically for orders shipped to the 27 EU member countries, through our registered IOSS (Import One-Stop Shop) system.
The EU countries covered are: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.
For orders to these countries, VAT is added to the order total on your BrandSKU invoice. Your customer won't be charged additional customs fees on delivery, since the VAT has already been settled through IOSS.
What BrandSKU Does Not Handle
BrandSKU does not collect VAT for orders shipped to countries outside the EU, including the United Kingdom and Norway. Customers in these regions may be required to pay VAT and customs duties directly upon delivery, according to local regulations.
Note: If you sell to customers in the UK, Norway, or other non-EU countries with their own VAT rules, you may need to register for VAT locally and set up VAT collection in your store. This depends on your sales volume and country-specific thresholds — consult a tax advisor to confirm your obligations.
What You Need to Do as a Seller
Even when BrandSKU collects VAT on the fulfillment side, you may still have obligations on your own side depending on where your business is registered and where your customers are.
Most sellers will need to charge VAT to their customers through their store to remain compliant and protect their profit margins. If you've registered and received a VAT ID for your business, set up VAT collection in your store's tax settings (Shopify, Wix, TikTok Shop, and Etsy all support this).
If you'd rather not deal with VAT in specific regions, you can block or exclude sales to those countries through your store's shipping or availability settings.
Handling the VAT Cost on Your Margins
Since VAT is added to your order cost on BrandSKU's invoice for EU orders, you'll want to make sure it's covered by what your customer pays.
Two common approaches:
- Raise the retail price of your products to absorb the VAT.
- Increase the shipping cost for specific countries to cover the added VAT amount.
Either approach keeps your margins intact when selling to EU customers.
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