The €10,000 distance sales threshold: what happens when you cross it

The €10,000 distance sales threshold is the line that separates charging your domestic VAT from having to charge your customer’s country VAT. Crossing it is neither optional nor announced: it happens on the order that pushes you over, and from that point on all your intra-EU B2C invoicing changes rules. Here is exactly what happens and how to know where you stand.

What counts and what does not count toward the threshold

The threshold is €10,000 per year, aggregated for the entire EU. It is not €10,000 per country: it is the sum of everything you sell at a distance to end consumers in other member states.

Counts:

• Sales of goods shipped from Spain to private individuals in other EU countries.
• Electronically supplied services to private individuals in other EU countries.

Does not count:

• Sales to businesses with a valid VAT ID, which are exempt under reverse charge.
• Sales within Spain.
• Sales outside the EU, which are exports and follow other rules.

That distinction matters: a store with a lot of intra-EU B2B business can invoice a lot to the EU and still be far from the threshold, because exempt transactions do not add up.

What exactly happens the day you cross it

From the transaction that pushes you over €10,000, you stop applying the Spanish 21% rate to distance sales and start applying the rate of the destination country. 19% in Germany, 20% in France, 22% in Italy, 27% in Hungary.

And with the rate change comes the obligation change: that VAT does not go in your Spanish 303 return, it is declared to the destination country. You have two ways to do it, and only one is reasonable for a small store.

Register in each country

Register for VAT in Germany, France, Italy, and wherever you sell. Each registration brings its own return, deadlines, and usually a local advisor. Not viable unless you sell a lot in one specific country.

Use OSS

The one-stop shop: you declare all EU VAT in a single quarterly return filed in Spain, and the tax authority distributes it to each country. This is what practically all e-commerce businesses use.

OSS: the alternative to registering in each country

You can opt into OSS before crossing the threshold, voluntarily. It makes sense if you know you are going to cross it: it avoids the abrupt switch in the middle of a quarter and the mess of having orders with two different criteria in the same period.

What OSS does not remove is the obligation to apply the correct rate on each sale. The return is unified; the calculation is still by country. That is why the store has to know, at checkout, which rate applies.

How to know how much you have accumulated

Here is the practical problem: WooCommerce does not keep track of that. You can pull a sales report by country and add it up manually, but you have to remember to do it, and you must exclude exempt transactions and those outside the EU.

EHERO Woo VAT shows it in the dashboard: accumulated distance sales versus the €10,000 threshold, with the percentage completed. The idea is to see it coming with room to spare, not discover it in the return.

The official criteria and amounts are in the European Commission VAT documentation.

And if I already crossed it without realizing

It happens more often than it seems, especially in stores that grow quickly in summer or during campaigns. What you need to do is reconstruct from which order the threshold was exceeded, recalculate the VAT on everything after that using the destination country rate, and regularize it.

It is not pleasant, but it is much cheaper to do it yourself than to wait for it to be detected. To reconstruct it, you need sales details by country and date, which is exactly what the plugin’s OSS report provides.

If you also handle invoicing in an ERP, it is worth making sure the data matches in both places: that is where the ERP connectors for WooCommerce come in.

What the crossing looks like in a real store

A Spanish store invoices EU private customers an average of €800 per month. In January it reaches €800, in June €4,800, and during the September campaign it makes €3,000 in one month. In that September it crosses the €10,000 threshold halfway through the month.

From the order that pushes it over, all subsequent distance sales carry the destination country rate. In other words: within the same month there are orders with Spanish VAT and orders with German, French, or Italian VAT. If the store did not detect it at the time, in October it has to be reconstructed order by order.

That is the scenario you want to avoid, which is why the accumulated total should be checked with a buffer, not at the end of the quarter.

What happens the following year

Once the threshold has been exceeded, the obligation to apply the destination rate remains for the rest of the financial year and the next one. It is not a condition that resets every January just because you start from zero: if you crossed it, you stay within it.

The B2B case, which confuses many people

Sales to businesses with a valid VAT ID do not count toward the threshold because they are exempt. This has a counterintuitive consequence: two stores invoicing the same amount to the EU can be in opposite situations.

The one that sells mostly to businesses may invoice €60,000 to the EU and still not have crossed the threshold. The one that sells to private individuals crosses it at €10,001. What determines your situation is not how much you sell abroad, but to whom.

And for a transaction to count as exempt B2B, it is not enough for the customer to say they are a business: the VAT ID must be registered as an intra-EU operator and you must verify it. How to do that is explained in the intra-EU VAT guide.