EU VAT One-Stop Shop (OSS): Thresholds, Returns, and IOSS

The EU VAT One-Stop Shop is an electronic system that lets a business register for VAT in a single EU country, file one periodic return, and make one payment to cover business-to-consumer sales across every member state where its customers sit. It replaces the older obligation to register separately in each country you sold into. The system launched on 1 July 2021 and now runs as three related schemes, each aimed at a different type of seller.¹

The Three Schemes and Which One Fits You

Picking the right scheme matters. Registering under the wrong one can get your application rejected or invalidate your filings.

Union scheme: for businesses established in the EU, or non-EU businesses that ship goods from a warehouse inside the EU. It covers cross-border sales of both goods and services to consumers in other member states.²
Non-Union scheme: for businesses with no establishment or warehouse anywhere in the EU. It covers only services supplied to EU consumers, such as digital products, consulting, or professional services.²
Import One-Stop Shop (IOSS): for distance sales of goods imported from outside the EU in consignments worth no more than €150. Any business can use it, but non-EU sellers generally must appoint an EU-based intermediary.¹

All three schemes cover only business-to-consumer sales. Sales to VAT-registered businesses follow standard reverse-charge rules and cannot be reported through the OSS.³

The €10,000 Threshold for EU Sellers

If your business is established in the EU, you don’t have to charge destination-country VAT until your cross-border B2C sales exceed €10,000 in a year. The threshold is cumulative across all member states and covers both physical goods shipped to other EU countries and telecommunications, broadcasting, and electronic services. Below it, you keep charging VAT at your home country’s rate.¹

Once you pass €10,000, you must charge each customer VAT at their own country’s rate. The OSS exists so you can report and pay all of that through one portal rather than register in every country whose rate you apply.

What the OSS Does Not Cover

Some sales stay outside the system entirely. Excise goods such as alcohol and tobacco cannot be declared through the IOSS, even when they would otherwise qualify as low-value imports. New vehicles and goods that require assembly or installation at the customer’s location fall outside both the intra-EU distance sales and imported distance sales definitions.² For anything excluded, you register for VAT directly in the relevant member state and file there.

Registering and When It Starts

You can only register for the OSS in one country, called your Member State of Identification (MSI). The rules dictate which country that is rather than leaving it to you. Union scheme users register in the country where the business has its seat or a fixed establishment. Non-Union scheme users, having no EU presence, can generally pick any member state.²

You register through the MSI’s electronic portal. Be ready with your VAT identification number, bank details (IBAN and BIC), information on any fixed establishments in other member states, and details of any prior EU VAT registrations you’ve held.⁴

For the Union and Non-Union schemes, registration usually takes effect on the first day of the calendar quarter after you apply. Apply in February, start using the OSS on 1 April. If you make a qualifying sale before that date, you can backdate the start to the date of that first supply, but only if you notify your MSI by the tenth day of the month following the sale. Miss that window and you’ll have to register directly in the country where the sale happened. IOSS registration is different: it takes effect as soon as you’re allocated your individual identification number.⁵

Filing Quarterly Returns (Including Nil Returns)

Every quarter, you compile the total value of your supplies to each member state where customers were located, broken down by applicable VAT rate. Report the taxable amount and the VAT due separately; the figures should not include the VAT itself. Because rates and reduced-rate categories differ between countries, your accounting system has to track the destination of every B2C sale and apply the right rate.

A quiet trap: you must file a return every quarter even if you had no qualifying sales. Nil returns are mandatory, and skipping them counts toward the three-consecutive-missed-periods threshold that triggers exclusion from the system.⁴

Deadlines and the Single Payment

Returns are filed electronically by the end of the month following each quarter:

Q1 (January to March): file and pay by 30 April
Q2 (April to June): file and pay by 31 July
Q3 (July to September): file and pay by 31 October
Q4 (October to December): file and pay by 31 January

Both the return and the payment share the same deadline. The IOSS follows the same end-of-the-following-month structure, but returns are monthly rather than quarterly.⁶

The single payment is the practical heart of the system. You send one total to your MSI, which distributes each country’s share to it. Payment is generally in euros, though member states outside the eurozone may require their national currency. Every payment has to carry the unique reference number generated when you submitted the return; without it, the money can’t be matched to your filing.⁶

Late payments attract interest and penalties set by the member state of consumption where the VAT was owed, not your MSI. Those rates vary widely, so the cost of missing a deadline depends on where your customers are.

Fixing Mistakes on Past Returns

You cannot amend a return you’ve already filed. Corrections go into a later return, in a dedicated section identifying the original tax period and the affected member state of consumption. You have three years from the original filing deadline to make corrections through the portal.⁴

If a correction shows you overpaid VAT to one country, that credit cannot be used to offset VAT owed to a different country. A negative balance stays with the country it belongs to, and that country reimburses you directly under its own procedures. The European Commission recommends refunds within 30 days of the tax authority agreeing with the correction, but the timeline isn’t binding.⁴

When a Marketplace Handles the VAT for You

If you sell through an online marketplace, you may not have to handle VAT on certain transactions at all. Under Article 14a of the VAT Directive, a marketplace that facilitates a sale is treated as the “deemed supplier,” meaning the platform becomes legally responsible for collecting and remitting VAT as if it were the seller.⁷

Two situations trigger it:

Goods imported from outside the EU in consignments worth €150 or less, regardless of where the underlying seller is based.
Goods already located in the EU sold to consumers by a seller that is not established in the EU, regardless of the goods’ value.

When the marketplace is the deemed supplier, it collects VAT from the buyer, reports it, and pays it. Your supply to the marketplace is treated as VAT-exempt. Selling exclusively through a platform in this role means your VAT obligations on those sales sit with the platform.⁷

How the IOSS Works, and What Changes in 2026

The IOSS handles goods imported from outside the EU in shipments valued at up to €150. When a seller or marketplace uses it, VAT is charged at the point of sale rather than at the border. The buyer pays the VAT-inclusive price upfront, and the parcel clears customs without an additional VAT charge on import.¹

Non-EU sellers using the IOSS must appoint an EU-established intermediary who registers on their behalf and shares joint liability for the VAT. IOSS returns are monthly.⁶

One change to plan for: in 2026 the EU will remove the customs duty exemption that currently applies to parcels valued below €150. VAT already applies to these shipments; once the new rules take effect, customs duties will apply on top of the VAT. The EU has committed to a simplified interim method for calculating those duties.⁸

Leaving Voluntarily vs. Being Excluded

You can leave the OSS on your own terms, but with notice. For the Union and Non-Union schemes, notify your MSI at least 15 days before the end of the quarter preceding the one in which you want to stop. For the IOSS, the notice period is 15 days before the end of the preceding month. Deregistration takes effect on the first day of the next quarter, or the next month for the IOSS.⁹

Mandatory exclusion is more serious. Tax authorities will remove you from the system if you:

Notify the MSI that you’ve stopped making eligible sales, or make no qualifying supplies for eight consecutive quarters.
No longer meet the scheme’s conditions, for example a Non-Union user that establishes a business presence in the EU.
Persistently fail to comply: miss three consecutive filing deadlines without filing within 10 days of each reminder, fail to pay VAT for three consecutive periods (unless the amount is under €100 per return), or fail to make records available within one month of a reminder.

Exclusion for persistent non-compliance carries a two-year quarantine, starting at the end of the quarter in which you were excluded. During that period you cannot re-register for any of the three schemes, and you’d have to register directly in every member state where you have customers.⁹

Records You Have To Keep

Keep detailed records of every transaction reported through the OSS for 10 years from the end of the year in which it took place. The obligation continues even after you stop using the system.⁴

Records need to include the member state of consumption, the type and date of supply, the VAT charged, and the information used to determine where the customer was located. They must be stored electronically and available for immediate transmission if a tax authority requests them. Both your MSI and any member state of consumption can ask at any time, and failing to produce records on demand is itself one of the triggers for mandatory exclusion.

1
European Commission. VAT e-Commerce – One Stop Shop
2
European Commission. The One Stop Shop
3
Your Europe. EU VAT One Stop Shop (OSS)
4
European Commission. Guide to the VAT One Stop Shop
5
European Commission. Register to OSS
6
European Commission. Declare and Pay in OSS
7
European Commission. Explanatory Notes on VAT e-Commerce
8
European Commission (Taxation and Customs Union). E-commerce: 150 EUR Customs Duty Exemption Threshold to Be Removed as of 2026
9
European Commission. Deregistration to OSS / Exclusion