How UK VAT is handled in systeme.io

If you sell products to customers in the United Kingdom or are a UK-based business, systeme.io automatically handles Value Added Tax (VAT) to ensure your transactions are compliant.

This article explains how UK VAT is applied to your sales for both digital and physical products.

Digital Products

The way VAT is calculated and applied to digital products depends on where your business (the seller) is located, the location of your customer, and whether you are selling directly to consumers (B2C) or to other businesses (B2B).

Seller is based in the UK:

a. Customers in the UK:

• B2C: A standard 20% VAT is applied to the sale.
• B2B: A standard 20% VAT is applied to the sale.

Note: Unlike EU regulations, the reverse charge mechanism does not apply to UK-to-UK B2B transactions).

b. Customers in the EU:

• B2C: VAT is applied based on the consumer’s location (the specific EU country's VAT rate).
• B2B: No UK VAT is charged (a valid VAT number is required).

Seller is based outside the UK:

a. Customers in the UK:

• B2C: A standard 20% VAT is applied to the sale.
• B2B: No VAT is charged (the reverse charge mechanism applies if the buyer has a valid UK VAT number).

Physical Products

The VAT logic for physical products operates differently from digital products. Systeme.io does not automatically calculate UK VAT for physical products.

Instead, sellers maintain full control and can continue to set custom VAT rates for physical products directly within their product or payment page settings to match their specific shipping and tax requirements.