VAT and GST for a US LLC Selling Digital Products and SaaS Worldwide (2026): EU Non-Union OSS, UK from the First Sale, India OIDAR, Canada, Australia, Japan and the Rest, B2B Reverse Charge, and When a Merchant of Record Is Simpler

The USA has no VAT, so many foreign founders assume their US LLC never charges it. That is right for sales to American customers, where the question is US sales tax. But it is wrong for sales to consumers in the rest of the world. Since the EU's 2015 rules on electronic services, more than a hundred countries have required foreign sellers of digital services to register and charge their VAT or GST on sales to their residents, wherever the seller is based.

A US LLC selling a $20-a-month SaaS plan, an online course, an e-book or a mobile app directly to a consumer in Germany, the UK, India or Australia is, in those countries' eyes, a foreign supplier with an obligation there. Many have no threshold for foreign sellers at all. Whether the owner lives in Dubai or Delhi makes no difference: the obligation belongs to the company that sells.

This guide explains how the main regimes work, which ones a small company is likely to meet first, and when it is simpler to let a merchant of record or an app store carry the obligation.

In short: VAT and GST on digital services are charged where the consumer lives. A US company selling directly to consumers abroad must usually register: in the EU through the non-Union OSS scheme, with no threshold for non-EU sellers; in the UK from the first sale; in India under the OIDAR rules at 18% with no threshold; and in Canada, Australia, New Zealand, Norway, Switzerland, Singapore, Japan and others above local thresholds. Sales to businesses are usually under the reverse charge, so no foreign VAT is charged if you collect and check the customer's VAT or GST number. Selling through a merchant of record (Paddle, Lemon Squeezy and others) or an app store moves the obligation to them. For US customers, the question is state sales tax instead.

Why a US company owes foreign VAT

Consumption taxes are designed to tax consumption where it happens. For physical goods, that is easy: VAT is collected at import. For services delivered over the internet, there is no border, so countries now require the foreign supplier to register and collect the tax itself.

The key ideas are the same almost everywhere:

• Electronically supplied services include SaaS, cloud software, apps, downloadable software, e-books, music and video, online courses that run without live human teaching, website hosting, online advertising and subscriptions to digital content.
• B2C (sales to consumers) is where the foreign seller must charge VAT or GST.
• B2B (sales to registered businesses) is usually handled by the reverse charge: the business customer accounts for the tax itself, and you do not charge it.
• Place of supply is where the customer is established or usually resides, determined from evidence such as billing address, IP address, card country or bank country.

Services that involve real human input, such as one-to-one consulting, design or development work done for a client, are generally not electronically supplied services. A freelancer's LLC invoicing businesses abroad for custom work usually has no foreign VAT registration duty, though the client may self-account under the reverse charge.

The European Union: non-Union OSS

A US company selling digital services to EU consumers can register for the non-Union One-Stop Shop (OSS) in one EU country of its choice. Through that single registration it:

• charges each customer's country's VAT rate (for example 19% in Germany, 20% in France, 21% in the Netherlands, 23% in Ireland, 27% in Hungary);
• files one quarterly OSS return, listing sales by country, and pays the total to the country of registration, which passes it on;
• keeps records of each sale for 10 years.

There is no threshold for non-EU sellers. The €10,000 EU-wide threshold that lets small sellers charge their home VAT applies only to businesses established in the EU. A US LLC's first sale to a consumer in Spain is in scope.

Two complications:

• If you, the owner, live in an EU country and manage the company from there, that country may treat the company as established in the EU, and the non-Union OSS may not be the right scheme. See your country guide.
• Sales of physical goods to EU consumers use different rules (the Import OSS for low-value consignments).

The United Kingdom

A non-established business selling digital services to UK consumers must register for UK VAT from the first sale: the £90,000 registration threshold does not apply to non-established businesses. It charges 20%, files VAT returns under Making Tax Digital, and keeps evidence of customer location. B2B sales to UK VAT-registered businesses are under the reverse charge.

India: OIDAR

India taxes Online Information Database Access and Retrieval (OIDAR) services supplied from abroad to Indian consumers (non-taxable online recipients). A US company selling SaaS, apps, streaming, e-books or online courses to Indian consumers must:

• register under the simplified registration scheme for OIDAR suppliers;
• charge IGST at 18%;
• file monthly returns.

There is no threshold for foreign OIDAR suppliers. Sales to GST-registered Indian businesses are under the reverse charge, so collect the customer's GSTIN. India's separate 2% equalisation levy on e-commerce supplies was abolished from August 2024, and the 6% levy on online advertising from April 2025, so OIDAR GST is now the main tax to consider.

This matters for Indian founders who sell to Indian customers through a US LLC: the US company is a foreign supplier for Indian GST, and the founder's own GST registration in India does not cover it. See how a US LLC is taxed when the owner lives in India.

Other countries a small company meets early

Thresholds and rates change, and several countries add new regimes every year; Sri Lanka, Azerbaijan and others introduced or changed theirs in 2026. Check current figures for any country before you register.

B2B sales: collect the number

For most countries, if the customer is a registered business, you do not charge their VAT or GST. Instead:

• collect the customer's VAT, GST or business number at checkout or on the invoice;
• validate it (for the EU, through the VIES database; for the UK, through HMRC's service; for India, the GSTIN search);
• show on the invoice that the reverse charge applies.

A B2B SaaS that sells only to companies, and checks every VAT number, often has no foreign VAT registrations at all, even though it sells in 40 countries. A tool that sells to freelancers, students and hobbyists has the opposite problem.

Evidence of customer location

Most regimes require two non-contradictory pieces of evidence of where the customer lives, such as:

• billing address;
• IP address;
• the country of the card or bank;
• the customer's mobile SIM country.

Payment platforms and tax engines collect these automatically. Keep them with each transaction for as long as the strictest country you sell to requires; the EU requires 10 years.

Doing it yourself, or handing it off

Selling directly with Stripe (or similar)

Your US company is the seller of record. You must decide where to register, charge the right tax, file returns and keep records. Stripe Tax and similar tools calculate the tax, show it at checkout and produce reports, and some can file returns in selected countries through partners. But the legal obligation stays with your company. See Stripe for non-residents.

Merchant of record

A merchant of record (MoR) such as Paddle, Lemon Squeezy, FastSpring or Gumroad buys your product and resells it to the customer. The MoR is the seller for tax purposes: it registers, charges and pays VAT, GST and US sales tax worldwide, and pays you the net proceeds. Fees are higher, typically 5% or more plus a fixed charge, and you have less control over checkout and the customer relationship.

For small companies selling to consumers in many countries, an MoR is usually the simplest choice until revenue justifies doing it directly. See the SaaS founders guide.

App stores

Apple's App Store and Google Play act as the seller for in-app and app store purchases in most countries, and collect and remit VAT and GST themselves. If you also sell directly on your website, those sales are yours. See the app developers guide.

Marketplaces for courses and digital goods

Platforms such as Udemy or Amazon KDP generally act as the seller, or deemed supplier, for VAT purposes in many countries. Check each platform's terms: if you are paid royalties or a revenue share, the platform usually deals with the tax.

And US customers: sales tax

Sales to American consumers are not subject to VAT. They may be subject to state sales tax, which in many states applies to SaaS and digital products, once your sales into a state exceed its economic nexus threshold (often US$100,000 a year). The rules are different in each state, and some states do not tax SaaS at all. See state taxes for a foreign-owned LLC.

Worked examples

These are illustrative cases, not client cases.

A note-taking app sold through the App Store. A Wyoming LLC owned by a developer in Hanoi sells a paid app and subscriptions only through Apple and Google. The stores are the sellers for VAT and GST worldwide, so the LLC has no foreign VAT registrations. Its income is the stores' net payouts.

An online course creator. A Delaware LLC owned by a yoga teacher in Bali sells pre-recorded courses from its own website to consumers, about 30% in the EU, 20% in the UK and 10% in Australia. Selling directly would mean a non-Union OSS registration, UK VAT from the first sale, and Australian GST once sales reach A$75,000. The owner moves checkout to a merchant of record, which charges and pays the VAT and GST, and the LLC receives the net amount.

A B2B SaaS tool. A Wyoming LLC owned by two founders in Kraków sells an API to companies worldwide through Stripe. Checkout requires a VAT or business number for every customer and validates it; individuals cannot subscribe. All sales are under the reverse charge, so the LLC charges no foreign VAT. The founders still check whether Poland treats the company as established there, because they manage it from Kraków.

An Indian founder selling to Indian users. A US LLC owned by a founder in Pune sells a $9-a-month productivity tool, with a third of subscribers in India. Those Indian consumers are OIDAR recipients, so the LLC must register under India's simplified scheme and charge 18% IGST on their subscriptions, even though the founder's Indian proprietorship is already GST-registered.

Common mistakes

• Assuming a US company never charges VAT because the USA has none.
• Relying on the EU's €10,000 threshold, which does not apply to non-EU sellers.
• Charging VAT to businesses instead of applying the reverse charge, or applying it without checking the VAT number.
• Ignoring India's OIDAR rules when selling to Indian consumers through a US company.
• Treating Stripe Tax as compliance: it calculates, but your company is still the taxpayer.
• Not keeping location evidence for each sale.
• Forgetting US sales tax on digital products sold to American consumers.

Frequently asked questions

Does my US LLC have to charge VAT? On sales of digital services to consumers in countries with VAT or GST, usually yes, from the first sale in the EU, UK and India, and above local thresholds elsewhere. Not on sales to US customers.

Is there a threshold for EU VAT for a US company? No. The €10,000 threshold applies only to EU-established businesses. Non-EU sellers register for the non-Union OSS from the first B2C sale.

Do I charge VAT to business customers? Generally no. Collect and validate their VAT or GST number and apply the reverse charge.

Does Stripe handle VAT for me? Stripe Tax calculates and reports it, and can help with some filings, but your company remains responsible. A merchant of record such as Paddle or Lemon Squeezy takes over the obligation.

I only do custom development for clients abroad. Do I need VAT registrations? Usually not. Custom services with human input are not electronically supplied services, and business clients account for the tax under the reverse charge.

How UCB can help

We form US LLCs and corporations for founders selling software, apps and digital products worldwide, with the EIN, registered agent, US business address and bank application, and we file the company's US returns every year through our US tax filing service. For foreign VAT and GST registrations, we refer you to specialist providers or recommend a merchant of record. See our formation, EIN and bank account package.

Selling digital products worldwide through a US company? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.