The European Union stopped treating small parcels as too cheap to tax in July 2021. Since then every commercial consignment arriving from outside the bloc carries value added tax, and the only open question is who hands that money to a tax authority: you, a marketplace, a carrier, or the buyer standing at the door.
Import One Stop Shop, almost always shortened to IOSS, is the mechanism the European Commission built so that non-EU sellers could collect VAT at checkout instead of dumping the problem on the customer. It works well inside its boundaries and not at all outside them. This piece covers where those boundaries sit, what the registration route actually involves, and what changes the moment an order crosses the EUR 150 line.
In short
- The low value VAT exemption is gone. According to the European Commission, the EUR 22 import VAT relief was abolished across the EU on 1 July 2021, so VAT applies from the first euro of intrinsic value.
- IOSS stops at EUR 150. The scheme covers distance sales of imported goods with an intrinsic value up to EUR 150 per consignment, and nothing above it.
- Most non-EU sellers need an intermediary. Unless your country holds a VAT mutual assistance agreement with the EU, Commission guidance requires an EU-established intermediary to register and file on your behalf.
- Above the ceiling the parcel changes regime. Customs duty, import VAT at the border and a full customs declaration replace the single checkout charge, and the buyer may face a carrier handling fee.
- Marketplaces frequently owe the VAT instead of you. Under the deemed supplier rules, a facilitating platform accounts for the VAT on many imported low value sales, which changes what you report rather than removing your record-keeping duties.
Why the low value exemption disappeared
For decades each EU member state set its own import VAT relief for small consignments, typically somewhere between EUR 10 and EUR 22 of goods value. A parcel below that line entered without VAT. The policy made administrative sense when cross-border parcels were rare and the cost of collecting a few euros exceeded the revenue.
Volume killed it. The European Commission, when it proposed the VAT e-commerce package, pointed to two problems it considered structural rather than incidental. The first was revenue leakage from systematic undervaluation, where a shipment worth EUR 60 was declared at EUR 19 to slip under the threshold. The second was competitive distortion, because an EU retailer charged VAT on every sale while a non-EU competitor shipping direct did not.
The package that followed was adopted in 2017 and applied from 1 July 2021. It abolished the low value consignment relief for VAT, created IOSS for imports up to EUR 150, extended the One Stop Shop to intra-EU distance sales, and made online marketplaces liable for VAT in defined situations. If you want the wider commercial framing of why cross-border rules tightened across so many markets at once, our complete guide to selling on global e-commerce marketplaces sets the import rules alongside platform policy and logistics.
Two points about the 2021 change are still widely misunderstood. It removed the VAT exemption, not the customs duty exemption: duty relief for consignments under EUR 150 continued to exist separately, and that is the relief the 2026 customs reform targets. And it did not create a single EU VAT registration for everything, only a simplified return for specific transaction types. Background on how the EU VAT system is structured is available from this overview of European Union value added tax.
How IOSS works and who can use it
IOSS is a reporting simplification, not a tax holiday. You charge the destination country’s VAT rate at the point of sale, you transmit your IOSS identification number with the customs declaration, and the goods clear import VAT free because the VAT has already been accounted for. One monthly return in one member state covers sales into all 27.
The scope test: three conditions
A sale belongs in IOSS only if all three conditions hold at once. The goods must be dispatched from outside the EU to a private consumer in the EU. The intrinsic value of the consignment must not exceed EUR 150. And the goods must not be subject to excise duty, which rules out alcohol and tobacco regardless of value.
Intrinsic value is the value of the goods alone. Per Commission guidance on low value consignments, transport and insurance charges are excluded provided they are shown separately on the invoice, and so are other taxes identifiable by customs. A EUR 145 jacket with EUR 12 of shipping shown as a separate line stays inside IOSS; the same jacket sold at EUR 157 all-inclusive with no breakdown gives customs no basis to carve the freight out.
What the buyer sees at checkout
Done properly, an IOSS sale looks like a domestic sale to the customer. The price shown includes the VAT rate of the country the parcel is going to, and nothing is payable on delivery. That last part is the commercial reason the scheme matters: surprise charges at the door are among the strongest predictors of a refused delivery and a return you pay for twice.
The operational consequence is a tax engine that resolves the destination rate correctly at cart level, before payment. Standard rates across the bloc span a wide band, from 17 percent in Luxembourg to 27 percent in Hungary as of 2026 according to the Commission’s published rate tables, and reduced rates apply to categories such as books and some foodstuffs in many states. A single blended rate applied to all EU traffic will be wrong in most destinations, and the error compounds every month until someone reconciles it.
The one monthly return
IOSS returns are monthly. You report total sales and VAT due per member state of consumption, then pay a single amount to your member state of identification, which distributes it. The Commission’s official One Stop Shop portal publishes the current filing and payment deadlines, and those deadlines are the detail most worth checking directly rather than taking from a vendor summary.
What IOSS does not cover
IOSS does not cover business to business sales, consignments above EUR 150, excise goods, or goods already inside the EU when sold. That last exclusion catches more sellers than the others. If you hold stock in a European fulfilment centre, those sales are domestic or intra-EU supplies, which means a local VAT registration in the stock-holding country and, for cross-border consumer sales from that stock, the Union One Stop Shop scheme instead.
Choosing where to hold stock, and whether to hold any at all, is therefore a tax decision as much as a logistics one. Our walkthrough on how to choose your first international market as a small seller covers the sequencing question of testing demand on direct shipping before committing to in-market inventory.
Using an intermediary versus registering directly
Here the rules split by where your business is established. A seller established in the EU can register for IOSS directly in its own member state. A seller established outside the EU generally cannot, and must appoint an EU-established intermediary who registers for IOSS on the seller’s behalf, holds the IOSS number, files the returns and is jointly liable for the VAT.
The documented exception is narrow. Commission guidance allows direct IOSS registration without an intermediary for sellers established in a third country with which the EU has concluded a VAT mutual assistance agreement, where the goods are dispatched from that same country. Norway is the standing example cited in that guidance. Sellers in the United States, the United Kingdom, China and most other origins fall back to the intermediary route.
| Factor | Direct registration | Via an EU intermediary |
|---|---|---|
| Who qualifies | EU-established sellers; third-country sellers covered by a VAT mutual assistance agreement with the EU | Any non-EU seller, and the default route for US, UK and Chinese sellers |
| Who holds the IOSS number | The seller | The intermediary, who registers one number per represented seller |
| Who files the monthly return | The seller | The intermediary, from seller-supplied data |
| Liability for unpaid VAT | The seller | Joint liability, which is why intermediaries vet clients and ask for deposits |
| Typical ongoing cost | Internal compliance time plus software | A monthly or per-return fee plus setup, quoted per seller rather than per market |
| Switching cost | Low; the registration stays with you | Higher; moving intermediary means a new IOSS number and a carrier data update |
| Main failure mode | Missed deadlines with no one watching | Data handoff gaps, where the intermediary files what it was sent rather than what was sold |
Two practical notes on intermediaries. The IOSS number is attached to the representation relationship, so changing provider means a new number, which then has to reach every carrier and customs broker transmitting your declarations. And joint liability cuts both ways: a provider that goes quiet or loses its own registration leaves you exposed, so provider stability belongs in the selection criteria alongside price.
If what you actually need is a side-by-side of the schemes themselves rather than the registration route, our earlier explainer on IOSS, OSS and the EU VAT rules for cross-border sellers compares the Import scheme against the Union and Non-Union One Stop Shop variants, including which one applies when stock sits inside the bloc.
Orders above the IOSS ceiling and what happens then
The EUR 150 ceiling is where most seller confusion concentrates, because nothing about the checkout experience signals the change. The customer adds one more item, the consignment value crosses the line, and the parcel enters a different customs and tax regime with different paperwork, different costs and a different person paying.
Why the ceiling bites at consignment level
The test applies per consignment, not per order line and not per calendar month. Two EUR 90 items shipped in one box form a EUR 180 consignment that sits outside IOSS. The same two items shipped separately are two EUR 90 consignments, each inside it. That gap is real, and it is also where customs authorities look hardest.
Commission guidance is explicit that artificially splitting a single order to stay under the threshold is an abuse, and that customs may aggregate consignments presented together to the same consignee. Genuine operational splits, such as items shipping from different warehouses at different times, are a different matter. The distinction a customs officer will look for is whether the split follows your fulfilment reality or follows the threshold.
The two routes above EUR 150
Above the ceiling, import VAT becomes payable at the border alongside any customs duty, and a standard customs declaration replaces the simplified low value dataset. Who pays depends entirely on the delivery terms you chose, and that choice is the single biggest lever on the customer experience.
Under a delivered duty paid arrangement, you or your carrier act as importer, pay duty and import VAT up front, and recover nothing from the buyer beyond what you charged at checkout. Under delivered duty unpaid, the buyer becomes the importer and the carrier invoices them for duty, import VAT and a handling fee before release. The second route is cheaper for you on paper and reliably worse in practice.
What delivery duty unpaid actually costs
The refusal rate is the cost. A buyer who paid EUR 220 at checkout and then receives a carrier demand for EUR 60 has a strong incentive to refuse the parcel, and a refused international parcel generates an outbound leg, a return leg, often an abandonment fee, and a support conversation. Our note on cross-border returns and the policies that protect your margin works through why the return leg, not the original shipping cost, is what decides whether a high value cross-border order was profitable.
There is also a VAT recovery problem hiding in the unpaid route. When the customer is the importer of record and later returns the goods, the import VAT they paid is theirs to reclaim, not yours, and in practice most consumers never attempt it. The amount is small per parcel and corrosive to repeat purchase rates.
Marketplace deemed supplier rules in plain terms
The 2021 package introduced a rule that surprises sellers who read only the IOSS material. In defined situations the online marketplace is treated as if it bought the goods from you and sold them to the consumer, even though no such transaction happened commercially. The platform then accounts for the consumer VAT.
Per the VAT e-commerce provisions summarised by the Commission, the deemed supplier treatment applies in two main cases: distance sales of imported goods with an intrinsic value up to EUR 150 facilitated by a platform, and any supply of goods already located in the EU by a non-EU established seller to an EU consumer through a platform, regardless of value. In both, the platform collects and remits the consumer-facing VAT.
The consequences for a seller are specific and easy to get wrong. You do not charge VAT to the consumer on those transactions, so loading your own VAT on top produces a double charge that shows up later as a reconciliation mess. Your supply to the platform is typically treated as exempt or zero-rated, which still has to be reported correctly rather than left off the return. And your own records must separate marketplace flows from direct flows, because only the direct ones belong in your IOSS return.
Hybrid sellers feel this hardest. If the same product ships to the same country through Amazon, through a marketplace in another member state and through your own Shopify store, three VAT treatments can apply to three identical parcels. Keeping that straight is a systems problem, not a filing problem, and it is one of the recurring themes in our 2026 cross-border compliance refresher.
Duty, customs handling fees and delivery surprises
VAT is only one of the charges a European parcel can attract, and the others moved during 2026. The duty relief for consignments below EUR 150, which survived the 2021 VAT change, became the target of the customs reform package, and a separate per-line handling fee was added on top.
According to the European Commission, the reformed Union Customs Code was published in September 2026, and a delegated act set a handling fee of EUR 2 per tariff line on low value consignments, to be collected no later than 1 November 2026, stacking on a simplified duty charge of EUR 3 per low value consignment. Those figures were accurate as reported at the time of writing in late 2026, and both the amounts and the implementation dates are exactly the sort of detail that shifts during a phase-in. Verify the current position against the Official Journal and the Commission’s taxation and customs pages before pricing anything on it.
The table below shows how the charges stack on three order values into a 21 percent VAT country. It is an illustration of the mechanics rather than a quotation, because duty rates vary by commodity code and carrier fees vary by carrier and by terms.
| Scenario | EUR 40 order, IOSS | EUR 120 order, IOSS | EUR 300 order, duty paid |
|---|---|---|---|
| Inside the IOSS ceiling? | Yes | Yes | No, standard import |
| VAT collected at checkout | EUR 8.40 | EUR 25.20 | None at checkout under the standard route |
| Import VAT at the border | None, IOSS number transmitted | None, IOSS number transmitted | Payable on customs value plus duty plus freight |
| Customs duty | Low value regime, see reform note above | Low value regime, see reform note above | Full tariff rate by commodity code |
| Carrier handling or clearance fee | Usually absorbed in the shipping rate | Usually absorbed in the shipping rate | Charged per clearance, to you or the buyer |
| Who pays on delivery | Nobody | Nobody | Nobody under duty paid; the buyer under duty unpaid |
| Main risk | Wrong destination rate applied | Value drifting over EUR 150 with shipping bundled in | Refusal at the door if terms are unpaid |
One structural lesson from the 2026 changes is that the low value lane is becoming less of a shortcut. A fixed charge per consignment or per tariff line falls hardest on the cheapest parcels in percentage terms, which pushes the economics toward consolidation, bulk import and in-market stock for sellers with enough volume to justify it. That is a logistics decision with a tax consequence attached, and it needs modelling against your own average order value rather than against a headline.
Invoicing, records and monthly returns
Registration is the visible part of IOSS compliance. The recurring part is a monthly data cycle that has to produce the same numbers your payment processor and your carrier produced, and reconcile when they do not.
The filing rhythm
IOSS is a monthly scheme. The Union and Non-Union One Stop Shop schemes, which cover intra-EU distance sales and services rather than imports, run on a quarterly cycle, and a local domestic registration follows that country’s own calendar, which is usually monthly or quarterly depending on turnover. A seller running imports plus EU-held stock can therefore be on three different clocks at once.
| Obligation | What it covers | Filing frequency | Triggered by |
|---|---|---|---|
| IOSS return | Imported goods to EU consumers, up to EUR 150 per consignment | Monthly | Shipping direct from outside the EU |
| OSS Union scheme | Intra-EU distance sales of goods and certain services | Quarterly | Holding or dispatching stock inside the EU |
| Local VAT registration | Domestic supplies in the member state where stock sits | Per that country’s rules | Storing goods in that member state |
| Customs declarations | Every import, simplified or standard | Per consignment | Any physical movement across the border |
Nil returns still have to be filed in the IOSS scheme for months with no qualifying sales. A seasonal seller that goes quiet after the holiday peak and simply stops filing accumulates compliance failures rather than a dormant registration, and persistent non-filing can lead to exclusion from the scheme.
Records and the ten-year rule
Commission guidance sets a ten-year retention period for records of transactions covered by the import and One Stop Shop schemes, and those records must be made available electronically on request from any member state concerned. Ten years is longer than most e-commerce platforms retain granular order data on a standard plan, and longer than many sellers keep their platform at all.
The practical implication is an export habit rather than a storage policy. The fields that matter per transaction are the date, the customer’s member state, the taxable amount, the rate applied, the VAT amount, the currency and conversion used, and the consignment reference that ties the sale to a customs declaration. Exporting that set monthly to storage you control is cheap now and extremely difficult to reconstruct in year six.
Returns, refunds and corrections
When a customer returns an IOSS sale and you refund them, the VAT you charged is corrected rather than reclaimed through a separate process. Corrections to a previously submitted IOSS return are made in a subsequent return within the window the scheme allows, which means your returns data and your VAT data have to stay joined. A refund processed in your store but never reflected in a filing leaves you paying VAT on a sale that was unwound.
Currency and the conversion rule
IOSS returns are filed in euro. Sales invoiced in dollars, pounds or zloty have to be converted, and the convention set out in the VAT e-commerce rules is the European Central Bank rate published for the last day of the reporting period, or the next publication day if none was published. Using your payment processor’s settlement rate instead produces small monthly discrepancies that are tedious to unwind across a year.
This is general information, not tax advice
Everything above describes how the EU import VAT and customs framework is designed to work, based on published European Commission guidance and the VAT e-commerce legislation. It is general information for an international audience, and it is not legal, tax or customs advice. Your own position depends on where your business is established, what you sell, which commodity codes apply, where your stock sits and which marketplaces you use.
Rates, thresholds, fees and deadlines in this area change, sometimes with short notice and sometimes mid-year. The figures here were reported as accurate in late 2026 and should be verified against the Official Journal of the European Union, the Commission’s taxation and customs pages and the tax authority of your member state of identification before you rely on them. For a specific situation, a licensed customs broker, an EU VAT adviser or a trade attorney is the right place to take the question.
The wider point is that import VAT is one input into whether a cross-border market is worth entering at all, alongside shipping cost, returns rate, payment methods and local competition. Our guide to selling on global e-commerce marketplaces puts those inputs next to each other, which is a more useful frame than optimising the tax piece in isolation.
FAQ on EU VAT for sellers
Do I have to register for IOSS to sell into the EU?
No. IOSS is optional. The alternative is that import VAT is collected at the border, usually from the customer by the carrier, along with a handling fee. Most sellers choose IOSS not for the tax treatment but because it removes the charge at the door, which is the main driver of refused deliveries on low value cross-border parcels.
Is there a sales threshold before EU VAT applies to my shipments?
Not for imports. The EUR 10,000 threshold that sellers often cite applies to intra-EU distance sales by EU-established businesses, not to goods arriving from outside the bloc. According to the European Commission, import VAT applies from the first euro of intrinsic value since the low value relief was abolished on 1 July 2021.
What happens if a consignment is worth more than EUR 150?
It leaves the IOSS scheme. A standard customs declaration is required, customs duty may apply by commodity code, and import VAT is payable at the border rather than at checkout. Whether you or the buyer pays depends on the delivery terms, and duty unpaid terms shift both the cost and the refusal risk onto the customer.
Can I register for IOSS myself as a US or UK seller?
Generally no. Commission guidance requires non-EU sellers to appoint an EU-established intermediary, with a narrow exception for third countries holding a VAT mutual assistance agreement with the EU where goods are dispatched from that country. Norway is the standing example of that exception; the United States and the United Kingdom are not covered by it as of 2026, so confirm the current list with your adviser.
If I sell through a marketplace, who pays the VAT?
Usually the marketplace. Under the deemed supplier rules a facilitating platform accounts for the consumer VAT on imported consignments up to EUR 150 and on EU-located goods sold by non-EU sellers. You should not charge VAT to the consumer on those sales, but you still have to report your supply to the platform correctly and keep the records.
Does IOSS cover my sales to EU businesses?
No. IOSS applies to business to consumer distance sales only. A sale to a VAT-registered business in the EU follows the normal import and reverse charge rules, and your customer will typically handle the import VAT themselves. Mixing B2B orders into an IOSS return is a common filing error.
What if I hold stock in an EU fulfilment centre?
Those sales are outside IOSS, because the goods are already in the EU when sold. Holding stock in a member state normally triggers a local VAT registration there, and cross-border consumer sales from that stock are reported through the Union One Stop Shop scheme. The two systems can run in parallel if you also ship direct from outside the bloc.
How long do I need to keep IOSS records?
Ten years, per Commission guidance for the import and One Stop Shop schemes, and in a form that can be supplied electronically on request from a member state concerned. That is longer than most store platforms retain granular order data, so exporting the per-transaction detail to your own storage each month is the safer habit.
Do I still file an IOSS return in a month with no sales?
Yes. Nil returns are expected for every reporting period while the registration is active. Months of silence read as non-compliance rather than dormancy, and sustained failure to file can result in exclusion from the scheme, after which imports revert to border collection.