How to Set Up UK VAT in WooCommerce After Brexit (EU Sales)

Quick answer: Since Brexit, a UK store treats sales to EU customers as exports: goods shipped to the EU are generally zero-rated for UK VAT, and EU VAT may be due instead, for example through the EU’s IOSS scheme for low-value parcels. In WooCommerce, set your UK and EU tax rates in the Tax settings, then add a VAT number field and validation with an EU/UK VAT plugin for business buyers. Check the rules with your accountant.

As we know, Brexit changed the rules for UK business selling to EU customers, so if you are running a WooCommerce store in UK and selling to customers in the EU, all VAT rules have completely changed.

After Brexit, the UK is now treated as a non-EU country. This means new VAT rules, new thresholds, and new responsibilities.

For that, in this guide, we will show you:

• What changed.
• How UK VAT now works for EU sales.
• How to configure your store to stay compliant without any issue, or complexity to your checkout.

let’s get started!

What changed after Brexit

Before Brexit, the UK was part of the European Union, so when selling to EU customers, the EU VAT system applied. This made many things much easier, such as:

• A unified VAT system across EU countries.
• Simple cross-border selling with no major complications.
• More predictable and consistent pricing and tax calculations.

On January 1, 2021, the UK left the European Union, which meant a complete change in tax and trading rules.

When the UK sells to EU customers, it is now treated as an export from the UK and an import into the EU (International transactions), which completely changed the rules of the game.

The changes that affect WooCommerce store owners: 

• VAT rules now depend on the customer’s country, not just the seller’s location.
• Different EU countries apply different VAT rates that must be calculated individually.
• Some orders may require VAT to be charged at checkout, while others may not.
• Customers declarations and import procedures may apply depending on order value.
• Understanding EU VAT Rules for UK Stores

This directly affects your WooCommerce store:

• Checkout experience (tax visibility and pricing).
• Complexity of managing international sales can lead to a potential drop in sales.

• Customer expectations regarding final price and delivery fees.

And in the end, if things are not managed and organized properly, this will lead to:

• Incorrect tax charging.
• Cart abandonment due to unexpected fees.

• Compliance issues with EU regulations.

Things have changed completely, so now we will show you how to configure your store to stay compliant without any issues or complexity in your checkout process. But first you should understand EU VAT rules for UK stores:

Understanding EU VAT Rules for UK Stores

First thing, there are two types of orders according to classifications:

1. Orders Under €150 (low value goods)

• VAT is calculated according to the customer’s country.
• The tax is paid at checkout.
• It is often handled through the IOSS (Import one stop shop) system.

✔️This means that the customer will not pay any additional fees upon delivery.

2. Orders Over €150

• VAT is not calculated inside WooCommerce.
• The customer pays import VAT + customs upon delivery.

👉This may lead to:

• Surprises for the customer
• Refusal to receive the order.
• Customer pays upon delivery, not at checkout.

How to Configure Your WooCommerce Store (Step-by-Step)

If you are selling form the UK to companies within the EU (B2B), you need to do these three things:

1. Collect the VAT number form the client.
2. Make sure it is correct (validation).
3. If correct → cancel VAT (zero rate).

Here’s the setup process:

Step1:

➡ Set up UK VAT in WooCommerce Tax Settings 

Here you will do three steps:

• Your store country → UK

Then enable tax rates and calculations from general settings:

• UK customers → they have 20% VAT

• EU customers → they may have ZERO (but not automatically)

WooCommerce does not automatically provide exemptions based on country or B2B status. Therefore, we need to define a specific rule for (B2B EU) customers.

If the customer has a valid VAT number (Verified through VIES): 0% VAT (tax exemption) is applied.

But how is this handled in practice? There are a few approaches:

• Manual method: setting tax rates per country, which is not very practical or scalable.

• Rule-based conditions: using custom logic or additional configurations.

• The easiest and fastest solution: using the WooCommerce EU & UK VAT Numbers Validation plugin, which automatically validates VAT numbers and applies the correct tax rules.

Step2:

➡ Add a VAT Number Field to Checkout

➡ Download the Plugin

To get started, you will need to download the “WooCommerce EU & UK VAT Numbers Validation plugin.”

After downloading the plugin, from your WPFactory account, upload it to your WordPress site.

Step3:

➡ Access the Plugin 

Once the plugin is installed and activated, you can tailor it to fit your business needs.

​Go to WooCommerce > Settings > “EU VAT”

Step4:

➡ General – Frontend Options

Start with the general settings, that show you how the VAT field appears on your checkout page.

• Field label

It is the field name, meaning the name that appears for the tax number field on the payment page. For example: EU VAT number

• Placeholder

This is the help text inside the field, meaning the symbolic text that appears inside the field before the users type something, to help them understand what should be written inside the field.

• Description

An explanation appears below the field to clarify its purpose or any other instructions.

• VAT field will be

From here, you can choose when the field should be required:

1. Optional.
2. Required.
3. Required in the following countries.
4. Required in all countries except following countries.
5. Required if the customer fills the company field.

We recommend making it “Required only for EU countries“

• You can also enable: “Show field for selected countries only”. And enter EU country codes to display the field only where relevant

Step5:

➡Enable VAT Validation (VIES)

• Validate

From here, activate real VAT validation

• Validation Method

Then, choose validation method → SOAP (Recommended). Avoid using “Simple validation” if you rely on tax exemption, it only checks format, not actual validity.

Step6:

➡Automatically Apply VAT Exemption 

This is the most important step for handling B2B sales correctly.

The first thing, you should enable “Remove VAT for validated numbers” option.

This means:

• Valid VAT→ Customer is tax exempt (0% VAT)
• Invalid VAT→ VAT is applied normally.

If you want additional settings to ensure accuracy, and avoid incorrect exemptions, make sure to configure the following options:

• Keep VAT if shipping country is different from billing country

Common mistakes UK stores make

Final Thoughts

The VAT before Brexit is no longer the same after Brexit. Now there is a completely new system for UK to EU sales. Therefore, this requires understanding when to charge VAT, and when to exempt it to avoid mistakes that might reduce customer trust in your store.