The Complete Guide to EU VAT for Digital Products in 2026

Understanding EU VAT for Digital Products

If you're selling digital products to customers in the European Union, understanding VAT (Value Added Tax) is crucial. Since 2015, the EU requires that digital products sold to consumers (B2C) are taxed at the VAT rate of the customer's country, not the seller's country.

What Counts as a Digital Product?

The EU defines digital products as services delivered electronically, including:

• Software and templates (Excel, Notion, Canva templates)
• E-books and digital publications
• Online courses and webinars
• Music, videos, and streaming services
• SaaS (Software as a Service)

The One-Stop Shop (OSS) System

The OSS system simplifies VAT compliance for businesses selling across multiple EU countries. Instead of registering for VAT in each country, you can:

1. Register for OSS in one EU member state 2. File a single quarterly VAT return 3. Pay all EU VAT through one portal

VAT Rates Across the EU (2026)

VAT rates vary significantly across EU member states:

| Country | Standard Rate |

---------	--------------
Luxembourg	17% (lowest)
Germany	19%
France	20%
Spain	21%
Italy	22%
Denmark	25%
Hungary	27% (highest)

Using a Merchant of Record

The simplest solution for non-EU sellers is to use a Merchant of Record (MOR) like Lemon Squeezy or Paddle. These platforms:

• Handle all VAT collection and remittance
• Generate compliant invoices automatically
• Remove the need for EU VAT registration
• Support multiple payment methods popular in Europe

Key Takeaways

1. Always know which VAT rate applies to your customer's country 2. Consider using a Merchant of Record to simplify compliance 3. Keep records of all transactions for at least 10 years 4. Use our EU VAT Calculator template to quickly calculate VAT for any EU country