IOSS explained: the EU e-commerce VAT one-stop shop (2026)
The parcel that arrives 'with surprise fees'
You run a Shopify store shipping phone accessories. A French customer orders a EUR 90 case, dispatched straight from your supplier in Shenzhen. Two outcomes are possible: either the parcel lands with nothing more to pay because VAT was collected at checkout, or the carrier demands EUR 18 of VAT plus a EUR 12 clearance fee on the doorstep — and your customer leaves a one-star review. The difference between those two worlds is four letters: IOSS.
The Import One-Stop Shop is the seller-side counterpart to the de minimis threshold. Since the EU e-commerce VAT reform of 1 July 2021, VAT is due from the very first euro on goods imported into the EU (the old EUR 22 relief is gone). IOSS lets you collect that VAT at the point of sale and declare it in one place, rather than letting it fall on the customer at delivery.
This guide explains how IOSS works from the seller's side, who must register, how the EUR 150 threshold is actually measured, and what happens when a marketplace takes over the obligation.
What IOSS actually does
IOSS is an optional VAT simplification for distance sales of imported goods with an intrinsic value not exceeding EUR 150 per consignment. The mechanics:
- The seller (or marketplace) charges VAT at the destination country's rate at the moment of purchase.
- They receive a single IOSS number (format 'IM' followed by 10 digits — 12 characters total) from one member state of identification.
- That number is passed to the carrier and entered on the customs import declaration. Customs sees VAT is already paid: the parcel clears without import VAT and without a handling fee.
- The seller files one monthly IOSS return covering all sales across the 27 member states and remits the collected VAT by the end of the following month.
The customer pays an all-in price at checkout, the parcel clears faster, and the seller manages one filing obligation instead of up to 27 national VAT registrations.
The EUR 150 threshold: intrinsic value, not CIF
This is the most commonly misunderstood point. IOSS eligibility is judged on intrinsic value — the price of the goods alone, excluding transport, insurance and taxes (provided those charges are shown separately on the invoice). It is not the CIF value used to compute customs duty above the threshold.
IOSS also excludes excise goods (alcohol, tobacco, alcohol-based perfume) regardless of value — those move under a separate regime.
| Situation | Intrinsic value | IOSS? | VAT treatment |
|---|---|---|---|
| Goods EUR 90 + EUR 15 shipping | EUR 90 | Yes | VAT at checkout via IOSS |
| Goods EUR 145 + EUR 20 shipping | EUR 145 | Yes | Under 150 despite EUR 165 paid |
| Goods EUR 180 | EUR 180 | No | Import VAT + possible duty |
| Bottle of wine EUR 40 | EUR 40 | No (excise) | Excluded — excise regime |
Key takeaway: a parcel can cost the customer EUR 165 (goods + shipping) yet still qualify for IOSS because its intrinsic value is EUR 145. Conversely, a EUR 180 item drops out of IOSS and falls back into standard import VAT.
Who registers, and where?
Three cases:
- EU-established seller: registers for IOSS in its own member state, no intermediary required.
- Non-EU seller (US, UK, India, China…): must appoint an EU-established IOSS intermediary, who obtains the number and shares liability for the VAT.
- Marketplace sale: the electronic interface is 'deemed supplier' and uses its own IOSS number. The underlying seller must not declare those sales again — doing so risks double taxation.
Registration is with a single country only: the one-stop shop avoids opening 27 national VAT files. UK sellers should also read our post-Brexit UK import guide for the parallel HMRC rules.
Three worked examples
Example 1: US seller shipping a USD 100 item to France
Intrinsic value = USD 100 (~EUR 92)
Non-EU seller → IOSS intermediary required
France VAT (20%) = 92 × 20% = EUR 18.40
Checkout price = ~EUR 110 incl. VAT + shipping
Delivery charges = EUR 0 (VAT prepaid)
The seller charges French VAT at checkout, the intermediary files the monthly return, and the parcel clears French customs without a VAT hold. Without IOSS the carrier would advance the VAT and add a EUR 10–15 disbursement fee.
Example 2: UK vs EU — the same GBP 120 order
To a UK buyer: GBP 120 < GBP 135 → seller charges UK VAT (20%) = GBP 24, register with HMRC
To an EU buyer: EUR 140 < EUR 150 → charge destination VAT via IOSS
Two separate registrations required to serve both markets
An Indian or US seller shipping to both Britain and the continent needs a UK VAT registration (HMRC, no intermediary) and an EU IOSS registration (via intermediary). The thresholds (GBP 135 vs EUR 150) and portals differ — don't assume one covers the other.
Example 3: EUR 180 jewellery — outside IOSS
Intrinsic value = EUR 180 → above EUR 150
IOSS = not available
Import VAT (e.g. Germany 19%) = EUR 34.20 at entry
Jewellery duty (HS 7113) = typically 2.5%
Carrier fee = often EUR 12–20
Above EUR 150 the seller must choose: let the buyer pay VAT and fees on delivery, or clear DDP so the price stays all-in. IOSS cannot help here — it is strictly a low-value scheme.
Model your EU sales on the TRADE-COST calculator
Enter value, destination country and HS code: the calculator separates IOSS-collected VAT from customs duty and tells you whether your parcel stays under EUR 150.
Run calculation →Conclusion: IOSS is a commercial edge, not a burden
IOSS is optional, but skipping it means letting your EU customers discover surprise fees on delivery — the leading cause of refused parcels and bad reviews. Used well, it folds VAT into the displayed price, speeds up clearance, and spares you from opening national VAT registrations across the bloc. First check whether your sales run through a deemed-supplier marketplace (in which case you have nothing to do); then, for your direct sales, register — through an intermediary if you are outside the EU.
To go further, read our de minimis threshold guide (the duty side at the border), our post-Brexit UK guide, and our note on recoverable import VAT.
Frequently asked questions
What is the difference between IOSS and the de minimis threshold?+
They are two separate mechanisms that work together. The de minimis threshold is a customs/buyer-side rule: below EUR 150 intrinsic value, no customs duty is charged on entry into the EU. IOSS is a seller-side scheme: it lets you collect VAT (due from the first euro since July 2021) at the point of sale and remit it through a single return. A EUR 90 parcel benefits from both: zero customs duty (de minimis) and VAT prepaid at checkout (IOSS), so no surprise charge on delivery.
Can a non-EU seller (US, UK, India) use IOSS?+
Yes, but a seller not established in the EU must appoint an EU-established IOSS intermediary (usually a tax firm or specialist provider) who becomes jointly liable for the VAT. The only exception is sellers established in a third country that has a mutual assistance agreement on VAT with the EU (currently Norway), who can register directly. US, UK, Indian and Chinese sellers therefore all need an intermediary.
Does the EUR 150 threshold include shipping costs?+
No. IOSS applies to the 'intrinsic value' of the goods — the price of the goods alone, excluding transport and insurance (provided they are shown separately on the invoice) and excluding taxes. A EUR 145 item with EUR 20 shipping is still IOSS-eligible because its intrinsic value (EUR 145) is under the threshold. Note this intrinsic-value base differs from the CIF value used to compute customs duty above EUR 150.
How does IOSS compare with the UK GBP 135 scheme?+
They are similar in spirit but legally separate. Since 1 January 2021 the UK requires overseas sellers to charge and account for UK VAT at the point of sale on consignments up to GBP 135, registering directly with HMRC (no intermediary needed). The EU IOSS covers consignments up to EUR 150 across all 27 member states through one registration. If you sell to both the UK and the EU, you generally need a UK VAT registration and a separate EU IOSS registration.
What about parcels above EUR 150?+
IOSS only covers consignments up to EUR 150 intrinsic value. Above that, import VAT is due under normal rules (typically collected by the carrier or via a standard import declaration), and customs duty may apply depending on the HS code and origin. For those flows consider DDP clearance through your forwarder, a local VAT registration, or the special arrangements where the postal operator collects VAT from the buyer.
Marie Fontaine
Marie leads customs research at TRADE-COST. She spent eight years in tariff classification and post-clearance audits before joining the product team to turn customs expertise into software.
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