The Import One-Stop Shop (IOSS) is an optional EU scheme that lets a seller charge VAT at checkout on low-value goods shipped to EU consumers from outside the EU, then declare and pay that VAT in one monthly return instead of the customer paying import VAT when the parcel arrives. It covers goods in consignments with an intrinsic value of up to EUR 150, and it has applied since 1 July 2021.
This article is educational information, not tax advice. Rules, thresholds and national procedures can change, so confirm the current position with the tax authority of the Member State where you register.
IOSS at a glance
| Question | Answer |
|---|---|
| What is it? | A scheme to declare and pay VAT on distance sales of imported low-value goods |
| Since when? | 1 July 2021 |
| Which goods? | Consignments with an intrinsic value of up to EUR 150, excluding goods subject to excise duties |
| Which customers? | Consumers (non-taxable persons) in the EU |
| Is it mandatory? | No, the schemes are optional |
| How often do you file? | Monthly, by the end of the month after the period |
| Do non-EU sellers need an intermediary? | Generally yes, with exceptions described below |
| Registration number | An IOSS VAT identification number in the format IMxxxyyyyyyz |
What does IOSS change?
Before July 2021, goods worth EUR 22 or less could enter the EU free of VAT. The European Commission abolished that exemption as part of its e-commerce VAT reforms, so VAT now applies to imported goods of any value.
Without IOSS, the customer typically pays the import VAT when the carrier delivers the parcel. With IOSS, the seller charges the VAT at the point of sale, using the VAT rate of the customer's country, and then declares and pays it through the scheme. The Commission describes the benefit as letting non-EU suppliers collect, declare and pay the VAT directly to the tax authorities rather than having customers pay it on delivery.
Which sales can use IOSS?
IOSS covers a narrow set of transactions. Each of these needs to be true:
- The goods are imported into the EU from a third country or third territory.
- The sale is to a consumer, a non-taxable person.
- The consignment has an intrinsic value of up to EUR 150.
- The goods are not subject to excise duties.
Sales that do not meet those tests sit outside IOSS. Goods above EUR 150 are handled through the normal import process at customs. Goods you already hold in EU stock and sell to a consumer in another Member State fall under a different scheme, covered below.
A marketplace that facilitates these sales can be treated as the supplier for VAT purposes. If you sell through a marketplace, check whether the marketplace is already handling IOSS for your orders before you register yourself.
Who can use IOSS, and when do you need an intermediary?
The Commission's guidance says a seller established in the EU does not need an intermediary. A seller established outside the EU generally has to appoint one.
An intermediary must be established in the EU. It registers first in its own Member State, which allocates it an identification number in the format INxxxyyyyyyz. That number is not a VAT number. The intermediary then registers each seller it represents, and each seller receives its own IOSS VAT identification number in the format IMxxxyyyyyyz.
There is one exception in the guidance: a seller established in a third country that has concluded a mutual assistance agreement with the EU on VAT recovery does not need an intermediary for goods dispatched from that country. Norway is the example the Commission gives. If that seller ships goods from another third country, it does need an intermediary.
For a US seller, this usually means appointing an EU-based intermediary before registering. See Do US companies have a VAT number? for how foreign VAT registrations fit with US tax IDs.
How does IOSS work in practice?
- Register. A seller or its intermediary registers in a Member State of identification and receives an IOSS VAT number.
- Charge VAT at checkout. The price shown to the customer includes VAT at the rate of the destination country.
- File a monthly return. The IOSS return is submitted electronically to the Member State of identification by the end of the month following the period.
- Pay. Payment goes to the same Member State, with the reference of the return. The Member State passes the return and payment on to the countries where the customers are located.
An IOSS return does not replace the seller's other VAT obligations, such as a domestic VAT return. Returns are generally made out in a single currency, normally euro.
IOSS vs OSS: what is the difference?
The EU runs three related schemes, and sellers often confuse them.
| Scheme | Who it is for | What it covers | Return |
|---|---|---|---|
| Import One-Stop Shop (IOSS) | Sellers of imported goods, with an intermediary for most non-EU sellers | Distance sales of imported goods up to EUR 150 to EU consumers | Monthly |
| Union OSS | Businesses established in the EU, and non-EU businesses for certain supplies of goods | Intra-EU distance sales of goods and cross-border B2C services | Quarterly |
| Non-Union OSS | Businesses not established in the EU | Cross-border B2C services supplied in the EU | Quarterly |
The Commission's OSS guidance also describes an annual EUR 10,000 threshold. Below it, certain EU-established sellers' cross-border B2C services and intra-EU distance sales can stay subject to VAT in their home Member State. It is separate from the EUR 150 IOSS limit.
OSS and IOSS returns are filed by the end of the month following the period, so a quarterly OSS return for July to September is due by 31 October.
Common mistakes with IOSS
- Using IOSS for goods already in the EU. If the goods are in an EU warehouse before the sale, they are not imports at the time of sale, so IOSS does not apply.
- Applying it above the limit. A consignment above EUR 150 in intrinsic value is outside the scheme.
- Including excise goods. The scheme excludes goods subject to excise duties.
- Assuming it is compulsory. The scheme is optional. A seller that does not use it leaves the import VAT to be collected at import.
- Treating the IOSS number as a regular VAT number. It is a separate identifier used for this scheme.
- Registering without an intermediary when one is required. Non-EU sellers generally need one.
How does IOSS relate to your VAT number?
An IOSS number is not the same as the VAT number a business holds in one country. For the formats of VAT numbers by country and how to validate them, see What is a VAT number?, and our free VAT number checker for EU numbers. For the wider picture of selling to Europe, see international ecommerce tax obligations and best cross-border VAT compliance software.
Compliance software such as Kintsugi's VAT product can monitor VAT thresholds and support registrations and filings, which is useful when a business sells into several EU countries.
Frequently asked questions
What does IOSS stand for?
IOSS stands for Import One-Stop Shop. It is the part of the EU VAT e-commerce rules that covers imported low-value goods sold to consumers.
Is IOSS mandatory?
No. The Commission describes the schemes as optional. A seller that does not use IOSS leaves the VAT to be collected when the goods are imported.
What is the EUR 150 limit?
IOSS applies to distance sales of imported goods in consignments with an intrinsic value of up to EUR 150. It does not apply to goods subject to excise duties.
Do US sellers need an intermediary for IOSS?
Generally yes. A seller established outside the EU needs to appoint an EU-established intermediary, unless it is established in a country with a mutual assistance agreement with the EU and ships from that country. Norway is the Commission's example.
Is IOSS the same as OSS?
No. OSS covers intra-EU distance sales of goods and cross-border services and is filed quarterly. IOSS covers imported goods up to EUR 150 and is filed monthly.
Does IOSS apply to sales to businesses?
IOSS covers distance sales to consumers, meaning non-taxable persons. Sales to VAT-registered businesses follow different rules, so check them separately.
Sources
- European Commission, VAT One Stop Shop portal and its pages on the One Stop Shop and on declaring and paying.
- European Commission, Guide to the VAT One Stop Shop.
- European Commission, New future-proof VAT rules: e-commerce made easy.
