Sell WordPress software across Europe without managing customer VAT yourself
Digital software sales can trigger different VAT treatment depending on where the customer lives, whether they are a business or consumer, and whether a valid VAT number is provided. For standard WPBay purchases, WPBay is the Merchant of Record and handles the buyer-facing VAT transaction.
- EU consumer VAT
- UK consumer VAT
- EU B2B reverse charge
- VAT number handling
- Customer invoices
- Subscription VAT
- VAT reporting & remittance
- Merchant of Record
The tax can depend on who buys, where they are and how the software is supplied
Electronically supplied software is subject to special VAT place-of-supply rules in Europe.
An EU consumer can receive different VAT treatment from a VAT-registered EU business. A Romanian buyer is different again because WPBay itself is established in Romania.
The UK has its own VAT system after Brexit, so UK transactions also need to be treated separately from EU VAT.
If you operate your own checkout, all of these questions become part of your tax administration. With WPBay, the customer-facing transaction belongs to WPBay under its Merchant of Record model.
The core VAT rules software sellers need to understand
These rules matter when selling directly. For standard WPBay transactions, WPBay applies the buyer-facing treatment as the Merchant of Record.
EU consumer sales
Electronically supplied services to EU consumers are generally taxed where the consumer is established, permanently resident or usually lives, subject to applicable special rules.
Destination-based VAT
Once the relevant destination rules apply, a consumer in France can receive French VAT treatment while a consumer in Hungary can receive Hungarian VAT treatment.
Cross-border EU businesses
For eligible B2B service transactions between businesses in different EU countries, the customer generally accounts for VAT locally through the reverse-charge mechanism.
VAT number verification
EU VAT numbers used for cross-border treatment should be validated and associated with the business making the purchase.
Romanian customers
WPBay is operated by a Romanian company, so purchases by Romanian customers are domestic WPBay transactions rather than cross-border EU transactions.
VAT One Stop Shop
Businesses selling directly can use the EU One Stop Shop to simplify VAT declarations for qualifying cross-border B2C transactions instead of maintaining separate registrations in every Member State.
Customer documentation
The VAT treatment needs to match the transaction records and customer-facing invoice or purchase documentation.
Records matter
Appropriate transaction and customer-location information needs to be retained to support the tax treatment applied to digital sales.
Subscriptions repeat the problem
Recurring software products create new charges over time, so the correct tax treatment needs to continue across subscription renewals.
The seller’s country does not determine the customer’s WPBay VAT
WPBay is operated by CODE IKIGAI SRL in Romania and is the contractual seller for standard marketplace purchases.
The buyer-facing VAT analysis therefore starts with the transaction between WPBay and the customer — not a direct transaction between the independent plugin developer and the customer.
Read the reverse-charge guideThe €10,000 threshold is real — but it is often oversimplified
The EU has a €10,000 annual threshold covering qualifying cross-border B2C telecommunications, broadcasting and electronically supplied services together with certain intra-EU distance sales.
But it does not simply mean that every software company worldwide can charge its home-country VAT until it reaches €10,000.
Among other conditions, the supplier must be established in only one EU Member State, and the relevant qualifying cross-border supplies must not exceed €10,000 excluding VAT in either the current or preceding calendar year.
Once the threshold is exceeded, the normal customer-location rule applies to qualifying electronic services.
The EU small-business VAT rules changed in 2025
Older VAT guides often describe only national small-business schemes such as Germany’s Kleinunternehmerregelung.
From 1 January 2025, eligible EU small businesses can also use a cross-border SME VAT scheme in other Member States, subject to the EU-wide annual-turnover ceiling of €100,000 and each participating country’s national threshold and conditions.
This can matter if you sell software directly. It does not change the basic WPBay structure: the end customer is buying from WPBay in a standard marketplace transaction.
The United Kingdom is a separate VAT jurisdiction
EU OSS does not cover UK VAT after Brexit.
A business selling digital services directly to UK consumers from outside the UK may therefore have separate UK VAT registration and reporting obligations.
HMRC states that digital services supplied to UK consumers are liable to UK VAT, and non-established taxable persons can be required to register regardless of the value of their taxable UK supplies.
For a standard WPBay marketplace purchase, WPBay handles the buyer-facing transaction instead of requiring each individual developer to operate their own UK checkout and VAT process.
EU and UK standard VAT rates
These are the standard rates published by EU and UK authorities as of September 2026. The exact rate applicable to a particular transaction can depend on product classification, territory and special rules.
Standard rates are shown for orientation. Electronically supplied services will often use the standard rate, but exemptions, special territories and product-specific treatment can apply. Always use current official tax data for an actual transaction.
VAT does not stop after the first subscription payment
A monthly or yearly software subscription creates recurring customer transactions.
The appropriate VAT treatment therefore needs to continue across renewals, not just the initial checkout.
Customer location, business status and tax rates can change over a long-running subscription, which is one reason recurring billing adds administrative complexity for a direct seller.
WPBay manages subscription billing and the applicable customer-facing transaction tax for recurring marketplace products.
WPBay centralizes the customer-facing VAT transaction
WPBay is operated by CODE IKIGAI SRL, a Romanian VAT-registered company, and acts as Merchant of Record for standard purchases made through the marketplace.
This means customers purchase from WPBay and WPBay is the contractual seller in the marketplace transaction.
Instead of every independent developer separately handling EU customer VAT, UK customer VAT, invoices, subscription tax treatment and customer refunds, WPBay manages that commercial layer centrally.
What WPBay handles — and what you still need to do
“WPBay handles VAT” refers to the end-customer marketplace transaction. It does not mean a WPBay seller has no tax or accounting responsibilities of their own.
WPBay handles
The standard transaction between WPBay and the customer.
- Customer checkout
- Payment processing
- Applicable EU consumer VAT
- Applicable UK customer VAT
- EU B2B reverse-charge treatment where appropriate
- Customer invoices and purchase documentation
- Subscription customer billing
- Refund administration
- Chargebacks and payment disputes
- Customer transaction-tax reporting and remittance where required
You still handle
Your own business and the earnings you receive from WPBay.
- Declaring your WPBay earnings
- Your own bookkeeping
- Your income or corporate tax
- Your local VAT registration where applicable
- Seller-to-WPBay invoicing if required locally
- Correct VAT treatment of any seller-to-WPBay invoice
- Recapitulative statements where applicable
- Your own direct sales outside WPBay
- Other local tax and reporting obligations
- Getting local accounting advice when required
Your customer sale and your WPBay earnings are two different accounting relationships
The first relationship is WPBay to the end customer. WPBay is the Merchant of Record and handles the customer-facing VAT.
The second relationship can be between you and WPBay. Depending on your country, legal form and VAT status, you may need to issue an invoice to WPBay or report your marketplace earnings in a particular way.
For example, an EU VAT-registered seller outside Romania may need to consider the general B2B place-of-supply rules and reverse-charge treatment for an invoice issued to WPBay.
Ask a local accountant how your own seller-to-WPBay relationship should be documented.
WPBay does not take over VAT on sales made somewhere else
The Merchant of Record structure applies to standard WPBay transactions. Your own website remains a separate sales channel.
Identify your customer
Determine whether the buyer is a consumer or business and where the customer belongs for VAT purposes.
Determine the VAT treatment
Check whether destination VAT, domestic VAT, reverse charge or another rule applies.
Register where required
Direct sellers may need OSS, UK VAT registration or other local registrations depending on the transactions.
Collect and report VAT
Charge the appropriate amount, retain supporting records and file and remit the tax through the relevant system.
Maintain subscriptions
Reassess recurring customer transactions as tax rates and relevant customer details change.
Handle refunds correctly
Keep refunds, credits and tax adjustments aligned with the original transaction.
Monitor rule changes
VAT rates, SME schemes and other rules change over time and should not be treated as static.
Keep evidence
Maintain appropriate customer-location, VAT and transaction information for your direct sales.
EU and UK VAT questions for WPBay sellers
Who is the seller to the customer on WPBay?
WPBay, operated by CODE IKIGAI SRL in Romania, is the Merchant of Record and contractual seller for standard marketplace purchases. Independent developers provide the products but are not the retail merchant contracting directly with the end customer for those purchases.
Does WPBay charge VAT to EU consumers?
WPBay handles applicable customer-facing VAT for marketplace purchases. EU consumer transactions are generally subject to the applicable B2C VAT rules, which commonly tax electronically supplied services according to the customer’s location.
What happens when an EU business provides a valid VAT number?
For an eligible VAT-registered business in another EU Member State, cross-border reverse charge will generally apply when the required business and VAT details are valid and match the transaction. The customer then accounts for the VAT locally.
What happens when a Romanian customer buys on WPBay?
WPBay is established in Romania, so a Romanian customer represents a domestic transaction for WPBay. The usual cross-border EU B2B reverse-charge mechanism therefore does not apply. Romanian VAT rules govern the sale.
What is Romania’s current standard VAT rate?
Romania’s standard VAT rate is currently 21%. The previous 19% rate found in older VAT guides is no longer current.
What is the €10,000 EU VAT threshold?
The EU provides a €10,000 threshold for qualifying cross-border B2C telecommunications, broadcasting and electronically supplied services and certain intra-EU distance sales. It is subject to specific conditions, including that the supplier is established in only one EU Member State and that qualifying supplies remain below €10,000 excluding VAT in both the current and preceding calendar year.
Does the €10,000 threshold apply to every software seller worldwide?
No. The special threshold has eligibility conditions and is not a universal exemption for every non-EU or multi-established software company.
What is the standard UK VAT rate?
The standard UK VAT rate is currently 20%.
Is there a UK VAT threshold for an overseas business directly selling digital services to UK consumers?
UK rules distinguish non-established taxable persons from businesses established in the UK. HMRC states that non-established businesses making taxable UK supplies, including digital services, can be required to register regardless of value rather than relying on the ordinary UK domestic registration threshold.
Can reverse charge apply to a UK business customer?
Yes. The UK has reverse-charge rules for qualifying cross-border B2B services. The exact treatment depends on establishing that the customer is acting as a business and on the applicable place-of-supply rules.
Who handles VAT on WPBay subscription renewals?
WPBay manages the customer-facing recurring billing and applicable transaction-tax treatment for subscription renewals processed through the marketplace.
Does WPBay file my own VAT return?
No. WPBay handles customer-facing transaction VAT for standard marketplace sales. Sellers remain responsible for their own VAT registrations, accounting, seller-to-WPBay invoicing, declarations and other local obligations where applicable.
Do I need to invoice the WPBay customer myself?
No. WPBay issues the customer-facing invoice or purchase documentation for the standard marketplace transaction. Sellers should not issue a second retail invoice to the same customer for that WPBay purchase.
Do I ever need to issue an invoice to WPBay?
Possibly. Your seller-to-WPBay relationship is separate from the WPBay-to-customer transaction. Whether you need to invoice WPBay, and what VAT treatment that invoice should use, depends on your country, VAT status, legal form and local accounting rules.
Let WPBay handle the customer-facing VAT side of your marketplace sales
Sell WordPress products through a Merchant of Record model where checkout, applicable EU and UK customer VAT, invoices, subscription billing, refunds and transaction-tax administration are handled through WPBay.