As UK-based sports clubs increasingly expand their digital reach, selling merchandise online and streaming live events to global audiences, they face a growing set of VAT challenges. These activities, while great at expanding international fan outreach and engagement, expose businesses to complex cross-border tax obligations that, if mismanaged, can result in financial penalties, reputational damage, and operational disruption.
This article outlines the key VAT risks associated with international online sales and digital content delivery, and offers guidance on how to mitigate them.
Online merchandise sales: VAT challenges in cross-border eCommerce
Selling physical goods to customers outside the UK – particularly in the EU – requires careful navigation of VAT rules that differ by jurisdiction.
EU distance selling and the IOSS scheme
Since Brexit, UK sellers are no longer part of the EU VAT system. For goods sold to EU consumers under €150, VAT must be collected at the point of sale. To simplify compliance, UK businesses can opt into the Import One Stop Shop (IOSS) scheme, which allows them to report and remit VAT for all EU sales through a single registration.
However, failure to register for IOSS or to collect the correct VAT can lead to delays at customs, fines, and customer dissatisfaction. Import VAT may be due and the buyer may be liable unless the seller uses a Delivered Duty Paid (DDP) model. Similarly, either the seller or the buyer will have to pay any applicable Customs Duties on goods over €150 – but you should be aware that this threshold is being removed potentially as early as next year so Customs Duties may be due on goods regardless of the value of the consignment. Sellers should also be aware that from March 2028, the current rules are changing which will effectively ‘force’ importers to register for the IOSS.
VAT registration and local compliance
If a business exceeds the local VAT threshold in any EU country, it may be required to register for VAT in that country. This creates administrative burdens, including filing local VAT returns and managing multiple VAT rates.
Additionally, businesses must ensure their invoicing systems reflect the correct VAT treatment and that prices displayed to consumers include applicable taxes.
Marketplace and fulfilment risks
Using third-party marketplaces such as Amazon can shift VAT collection responsibilities to the platform, but sellers must verify that the platform is compliant and that their own VAT obligations are met. If goods are stored in fulfilment centres within the EU, this may trigger a requirement for local VAT registration. Again, changes in 2028 will place more burdens on the marketplaces which will change the commercial relationships and payment arrangements for marketplace sales.
Live streaming: VAT implications for digital services
Streaming live games to international viewers introduces a different set of VAT risks, particularly around the place of supply and digital service rules.
Place of supply rules for digital services
Under EU VAT law, digital services – including live streaming – are taxed based on the location of the consumer, not the supplier. This means UK businesses must charge VAT at the rate applicable in the viewer’s country.
For non-EU businesses, there is no VAT registration threshold. VAT is due from the first sale, and businesses must either register in each country or use the One Stop Shop (OSS) scheme to simplify reporting.
Double taxation risk
If UK VAT is applied to a transaction and EU VAT is also required, businesses may face double taxation. This can occur if systems are not properly configured to distinguish between UK and non-UK consumers.
To avoid this, businesses must ensure their platforms can identify the consumer’s location and apply the correct VAT rate. This may involve collecting multiple pieces of evidence (e.g., IP address, billing address, etc) to determine the place of supply.
Pricing and transparency
VAT-inclusive pricing must be clearly communicated to consumers. Inconsistent or incorrect VAT treatment can lead to underpayment, audits, and penalties. Businesses should also review their terms and conditions to ensure they reflect VAT obligations and clarify who bears the tax burden.
Mitigating VAT risks: best practices
To manage VAT risks effectively, UK organisations engaged in international e-commerce and digital services should consider the following steps:
- Conduct a VAT audit to assess exposure across jurisdictions.
- Register for IOSS or OSS to streamline EU VAT compliance.
- Update billing and checkout systems to capture consumer location and apply correct VAT rates.
- Review contracts and policies to ensure clarity on VAT responsibilities.
- Seek expert advice from VAT specialists to stay ahead of regulatory changes.
Conclusion
As digital commerce and content delivery become central to global engagement strategies, VAT compliance is no longer a back-office concern – it’s a strategic imperative. UK organisations must proactively manage their VAT obligations when selling goods or streaming content to international audiences. With the right systems, registrations, and advice, they can minimise risk, maintain compliance, and continue to grow their global footprint.
Should you need support with understanding how these VAT risks relate to your organisation, HaysMac has specialised teams in both Sport and VAT, contact Tom Wilson, Partner and Head of Sport, or Dougie Todd, Partner, Co-Head of VAT for more.
