IOSS: VAT on Low-Value Goods Imported into the EU Under €150

The Import One-Stop Shop lets sellers outside the European Union collect VAT at checkout on goods valued at €150 or less and remit it through a single monthly return, so buyers aren’t hit with a surprise tax bill when the package arrives. IOSS VAT on low-value goods imported into the EU replaces country-by-country registration: one signup with one member state covers sales to consumers in all 27. The scheme took effect on July 1, 2021, under Directive 2017/2455, and it is now the standard route for non-EU sellers shipping small parcels to European customers.¹

The €150 Ceiling and What Counts Toward It

IOSS applies to consignments with an intrinsic value of €150 or less. The limit is the total value of the consignment, not per item. A package holding three items at €60 each comes to €180 and falls outside the scheme, even though no single item breaches the limit.²

Intrinsic value means the price of the goods when sold for export to the EU, excluding transport and insurance provided those charges are itemized separately on the invoice. Bundle shipping into the product price without a separate line, and customs will treat the whole amount as intrinsic value.³ Break shipping and insurance out on every commercial document.

Anything above €150 is outside IOSS entirely. The buyer will owe import VAT and possibly customs duties at the border, and the shipment needs a full customs declaration.⁴

Who Can Use IOSS

IOSS is a business-to-consumer scheme. If you sell directly to private individuals in the EU and ship from outside, it applies. B2B sales to VAT-registered buyers follow separate rules and cannot go through IOSS.⁵

Goods subject to excise duties are excluded whatever the value. That means alcohol, tobacco, and certain energy products at minimum, with individual member states free to add categories of their own.¹ Excise shipments go through standard import procedures even when the parcel is under €150.

The border VAT exemption only takes effect when a valid IOSS identification number appears on the customs declaration. Without that number, customs will charge VAT to the recipient on arrival, regardless of what you collected at checkout.³

When a Marketplace Handles VAT for You

If you sell through a platform such as Amazon, eBay, or Etsy, you may not need your own IOSS registration. Under Article 14a of the VAT Directive, online marketplaces that facilitate the supply of imported low-value goods become the deemed supplier: the platform is treated as buying the goods from you and reselling them to the customer, and it takes on the VAT.⁵

The marketplace supplies its own IOSS number for each qualifying order. You then have to pass that number to your shipping carrier electronically. Printing it on the label is not enough; it has to move as data in the customs declaration. If the number doesn’t reach customs, the buyer risks being taxed a second time.

Sellers who make every EU sale through a deemed-supplier marketplace do not need their own IOSS registration. Sell through both a marketplace and your own website and you need your own number for the direct sales, with the marketplace covering the facilitated ones.⁵

The Intermediary Requirement for Non-EU Sellers

Sellers based outside the EU without a business establishment in any member state must appoint an intermediary to use IOSS. The narrow exception covers sellers established in a country that has a mutual assistance agreement with the EU on VAT matters; the United States has no such agreement, so for US sellers an intermediary is mandatory.⁵

The intermediary has to be a taxable person established in the EU. They file the IOSS returns and pay the VAT on your behalf, and both they and you remain liable. If something goes wrong, tax authorities pursue the intermediary first and come after the seller if the intermediary cannot pay.⁵ Qualification rules for intermediaries vary by member state, so most non-EU sellers begin by finding and vetting one, because the rest of the process depends on that relationship.

Registering and Getting an IOSS Number

Registration goes through the national IOSS portal of a single EU member state, known as the Member State of Identification. For sellers using an intermediary, the MSI is the country where the intermediary is established. The application asks for your legal business name, physical address, tax identification details from your home country, and a contact for tax matters.

Once processed, you receive a unique IOSS VAT identification number. The format is “IM” followed by ten digits: a three-digit country code, a six-digit number assigned by the member state, and a check digit.⁶ That number goes on every customs declaration for qualifying shipments. Keep it secure. If a third party uses your number without authorization, you could be on the hook for VAT on their shipments.

The MSI portal is where you file returns, make payments, update business details, and eventually deregister. One registration covers sales to consumers in all 27 member states.

Charging the Right VAT Rate

Each member state sets its own standard VAT rate, and you charge the rate of the country where the goods are delivered. Hungary has the highest standard rate at 27%; Luxembourg has the lowest at 17%.⁷ Some goods qualify for reduced rates in some countries, so the same product may carry different rates in France and Spain. Your checkout needs to identify the delivery country and apply the correct rate before payment.

The VAT amount must be visible to the buyer at checkout, and the invoice or order confirmation should show the total price including VAT, the VAT amount, and your IOSS number.⁸ Get this wrong and customs may be unable to verify that VAT was already paid, which puts the buyer in line for a second charge at the border.

Filing the Monthly IOSS Return

IOSS returns are due by the last day of the month following the reporting period. Sales made in April must be reported and paid by May 31.⁹ The return breaks out total sales and VAT collected for each member state where you had customers. That single filing does the work of 27 separate national returns.

Nil Returns

Even a month with zero EU sales requires a return. A nil return carries your IOSS number, the tax period, and a VAT amount of zero. Skipping the filing because you had no sales is treated the same as failing to file an active return.⁹

Currency Conversion

Sales priced in a currency other than the euro have to be converted using the European Central Bank exchange rate published on the last day of the calendar month covered by the return. If no rate was published that day, use the rate from the next available day.¹⁰ Bank rates and commercial rates are not acceptable. Tax authorities recognize the ECB rate only.

Payment

Payments go to the MSI’s designated tax account. The portal supplies the banking details, including IBAN and a reference number that links your payment to a specific return period. A wrong reference can cause processing errors. International transfers may carry fees, and you are responsible for making sure the full VAT amount arrives; shortfalls from transfer charges or rounding will trigger follow-up notices.

Record-Keeping

Every IOSS transaction must be documented and retained for 10 years from the end of the year in which the sale occurred, even after you leave the scheme.¹¹ Records need to show the member state of delivery, the date of sale, a description of the goods, the value, and the VAT charged. They have to be kept electronically and produced on request to the MSI or to any member state where goods were delivered.

If you don’t produce records within one month of a reminder from the MSI, that counts as persistent non-compliance and leads to exclusion from IOSS.¹¹

Fixing Double Taxation

Double taxation happens when VAT is collected at checkout through IOSS and then charged again at the border, usually because the IOSS number didn’t reach the customs declaration or was flagged invalid. The correction path: the buyer provides proof that import VAT was charged at the border, the seller refunds the VAT originally collected and issues a credit note, and the seller corrects the IOSS return. If the refund falls in the same reporting period as the original sale, the sale is simply left off the return. If it falls in a later period, the correction goes on that period’s return. Keep the credit note and the proof of import VAT as supporting documentation.¹²

Corrections to IOSS returns are allowed within three years of the date the original return was due.

Leaving IOSS, Voluntarily or Otherwise

Voluntary Exit

You can leave IOSS at any time by notifying your MSI at least 15 days before the end of the month prior to your intended exit date. Cessation takes effect on the first day of the following month, and sales made after that date can no longer be declared through IOSS.¹³ There is no quarantine period, so you can re-register right away if you still meet the conditions.

Forced Exclusion

Tax authorities will remove you from the scheme for persistent non-compliance. The most common trigger: reminders to submit a return sent for three consecutive reporting periods, with no filing within 10 days of each reminder.¹³ Failure to produce records after a reminder is another route. Once excluded, your shipments revert to standard import procedures and buyers get charged VAT at the border.

Faster Customs Clearance

One practical benefit of IOSS is quicker clearance. A super-reduced dataset customs declaration for low-value consignments takes roughly one-third of the data elements of a standard declaration.² Because VAT has already been collected, customs can release the parcel without stopping to assess and collect tax, which cuts delivery delays. The simplified clearance is available to whoever submits the declaration, whether that is the seller, the carrier, or a postal operator.

1
European Commission. VAT e-Commerce – One Stop Shop
2
European Commission. Customs Formalities for Low Value Consignments
3
European Commission. Importation and Exportation of Low Value Consignments – VAT E-Commerce Package
4
European Commission. VAT E-Commerce Package of 5 December 2017 The Import Scheme
5
European Commission. Explanatory Notes on VAT E-Commerce
6
USPS. Import One-Stop Shop (IOSS)
7
Your Europe. VAT Rules and Rates
8
European Commission. VAT Invoicing
9
European Commission. Guide to the VAT One Stop Shop
10
Federal Central Tax Office (BZSt). Import One Stop Shop
11
European Commission. Record Keeping and Audits in OSS
12
European Commission. Proposed Solution to Regularise Double Taxation in the IOSS VAT Return
13
European Commission. One Stop Shop – Deregistration and Exclusion