IOSS vs OSS ecommerce VAT: which scheme applies to your sales? The answer depends on the actual route of the goods, their value, where they are stored when sold and whether the buyer is a consumer. IOSS can cover eligible low-value direct imports; Union OSS can simplify certain cross-border B2C sales from EU stock; import VAT applies when goods enter the EU.
Key takeaways
- IOSS may be used for distance sales of imported goods with an intrinsic value not exceeding EUR 150, excluding excise goods.
- Union OSS allows certain cross-border B2C sales from goods already in the EU to be reported through one Member State of identification.
- Import VAT arises at customs clearance and does not disappear because you use OSS for later sales.
- The country where stock is physically held can create local VAT obligations, even where customers are in other Member States.
- Before shipping, identify the importer, customs declarant, tariff code, customs value and VAT treatment for the specific flow.
Who needs to consider IOSS vs OSS ecommerce VAT: which scheme applies to your sales?
You need to consider these rules when you sell goods to consumers in the European Union or bring goods into it. The decisive factor is the logistics flow, not your company nationality or the marketplace on which you sell.
A French seller, a US company, a Chinese manufacturer and a British brand can all face the same mechanisms. What changes is where the product is when the customer orders and where it crosses the customs border.
Three sales flows to separate
Direct sale from outside the EU. You send a parcel from Shenzhen, New York or London directly to a consumer in France. This is a distance sale of imported goods. If the conditions are met, IOSS may be considered for low-value consignments.
Importing stock into the EU. You send pallets to an Amazon FBA warehouse in Germany. The goods are imported before they are sold to consumers. Import VAT and customs formalities apply on arrival; later sales may involve German VAT, OSS or other obligations depending on the flow. Read the EU stock import guide for ecommerce sellers before planning the first shipment.
Stock already held in the EU. You keep products in Spain and sell them to private customers in France. There is no import at the point of sale. Instead, you need to determine whether this is a domestic sale or an intra-EU distance sale, including whether Union OSS is relevant.
Council Directive 2006/112/EC on the common system of VAT provides the common EU VAT framework. The European Commission’s VAT One Stop Shop portal explains the OSS and IOSS schemes and their reporting purpose.
EU Seller Kit — If you are preparing a first shipment or do not yet know which customs, VAT and product obligations apply, the EU Market Entry Compliance Assessment helps you structure the checks to complete before dispatch.
What do import VAT, IOSS and OSS actually cover?
These mechanisms are not interchangeable because they operate at different points in the transaction. Import VAT concerns the physical entry of goods into the EU; IOSS and OSS mainly concern VAT reporting for certain distance sales to consumers.
Import VAT: goods entering the European Union
Import VAT becomes relevant when goods from outside the EU are released for free circulation in the Union. The customs declaration must accurately describe the goods, their value, origin and tariff classification. Regulation (EU) No 952/2013, the Union Customs Code sets the framework for EU customs procedures.
In practice, the importer must be clearly identified. An EORI number is generally needed for customs operations: it is the identifier used by customs authorities for economic operators. The European Commission explains its function on its Economic Operators Registration and Identification (EORI) page.
An EORI is not a VAT number and does not, by itself, settle import VAT. If you need to assemble an application, EORI file preparation can help you prepare the required information; the number itself is issued by the competent customs authority.
IOSS: low-value imported parcels sold directly to consumers
The Import One Stop Shop, or IOSS, is intended for certain distance sales of goods imported from outside the EU to consumers in the EU. It may apply where the intrinsic value of the consignment does not exceed EUR 150 and the goods are not subject to excise duty.
Intrinsic value is broadly the value of the goods themselves, excluding certain separately shown costs such as transport and insurance. Assess it carefully. Artificially splitting an order or declaring an inaccurate value can lead to customs difficulties and VAT corrections.
With IOSS, VAT is generally collected from the buyer at the point of sale at the rate applicable in the destination country, then reported through the scheme. The IOSS number must be passed securely to the operator making the customs declaration. It should not be displayed publicly on a customer invoice or product listing.
OSS: distance sales from stock in the EU
Union OSS can simplify VAT reporting for certain intra-EU B2C distance sales. It is particularly relevant where goods are already in free circulation and are dispatched from one Member State to consumers in other Member States.
Example: a business stores accessories in Poland and delivers them to private customers in France, Italy and Spain. Subject to a review of its transactions, it may report the relevant distance sales through OSS in its Member State of identification rather than filing a separate VAT return in every destination country for those sales.
This does not mean OSS replaces every local registration. Local stock, domestic sales, stock movements and other transactions can create VAT obligations in the relevant country. Check the treatment with the competent tax authority or a tax professional for your exact model.
When should you use IOSS, OSS or standard import VAT?
Choose the treatment only after mapping every physical goods flow. The same business may use IOSS for direct parcels, account for import VAT on pallets and report certain later sales through OSS.
| Situation | Treatment to assess | Key point to check |
|---|---|---|
| Direct parcel from outside the EU to a consumer | IOSS if conditions are met | Intrinsic value up to EUR 150 and no excise goods |
| Pallet from outside the EU to an EU warehouse | Standard import and import VAT | Importer, EORI, customs value, duty and country of entry |
| EU stock sent to a consumer in another Member State | Union OSS may apply | Dispatch country, destination country and sales covered |
| EU stock sent to a customer in the same country | Domestic VAT | OSS does not automatically cover domestic sales |
The EUR 150 threshold does not apply to every flow
A common mistake is to assume that the EUR 150 threshold removes customs formalities. It does not. Imported goods still require a customs declaration, and IOSS does not apply to excise goods. For consignments above that threshold, importation will generally follow the ordinary customs route, with duty and VAT to assess.
Use the customs cost simulator to structure the known import costs of a shipment. It calculates duty only where a valid tariff rate is available. The official TARIC consultation remains necessary to confirm the applicable tariff measures.
The stock location matters more than your registered office
Imagine a US company selling through Amazon. It is established in the United States, but its goods are stored in Germany and France. When a Spanish customer orders, the product leaves Germany. The US registered office does not turn that sale into a direct import: you must assess the stock location, dispatch country and destination country.
If you use several warehouses or a pan-European storage programme, record every stock movement. The Amazon Pan-EU compliance guide helps identify the points to check before enabling multi-country distribution.
How do you set up the correct VAT treatment step by step?
Start with the physical flow of goods, then align customs data, invoicing and VAT reporting. This order prevents you from selecting a VAT scheme before you know who imports the goods or where they are actually stored.
1. Map the route for every product
For each sales channel, record the manufacturing country, dispatch country, first EU entry point, warehouses used and delivery countries. Separate direct parcels from stock transfers because they are not treated in the same way.
Country Compliance helps you organise the customs, tax and product checks to review by origin, storage and destination country. Use it before entering a new market or moving stock to a new warehouse.
2. Identify the importer and prepare the EORI position
Decide who acts as importer in the customs declaration and who accepts the associated obligations. Do not leave this implied in discussions with your supplier, carrier or marketplace.
Then check whether the relevant operator has a valid EORI. The European Commission provides an official EORI validation tool. The trade flow, establishment country and allocation rules can affect where an application should be made, so consult the EORI registration by EU country guide.
3. Classify the product and secure customs data
The HS code or tariff subheading helps determine duty, measures and customs requirements to assess. A vague commercial description such as “accessories” or “gadget” is not enough to support a reliable declaration.
The HS classification assistant generates candidate HS subheadings with sources and confidence levels; you must then confirm the result in the Combined Nomenclature or TARIC. Gather the commercial invoice, payment evidence where relevant, transport data and origin documents as well. The EU import customs documents checklist sets out the documents to prepare.
4. Select the VAT treatment for each scenario
For a direct parcel from outside the EU to a consumer, first test whether IOSS conditions are met. For stock imported into the EU, organise import VAT and then assess later sales. For B2C dispatches between Member States from EU stock, consider OSS alongside any remaining local obligations.
The EU VAT calculator compares common domestic, intra-EU and import VAT scenarios from your transaction data. It supports your analysis; it does not replace a tax authority’s position or advice tailored to your circumstances.
5. Configure the sale, declaration and evidence
Your displayed prices, delivery terms, carrier data and VAT declarations must describe the same transaction. Keep records that link an order to the destination country, amount paid, VAT rate applied, tracking number and, where relevant, the IOSS or OSS return.
A mismatch between the price paid by the customer, the commercial invoice and the declared value can trigger a request for evidence or delay customs clearance. To prepare commercial documents and check flow consistency, TradeFlow AI provides a contextual assistant with stated limitations and sources where available.
Checklist before your first shipment
- I have separated direct non-EU sales, stock imports and sales from EU-held stock.
- I have identified the importer and customs declarant for each entry into the EU.
- I have checked the relevant operator’s EORI and the appropriate application country.
- I have reviewed the HS code, customs value, origin and applicable TARIC measures.
- I have determined whether IOSS is available for eligible low-value direct parcels.
- I have assessed OSS and any local VAT registrations for EU stock and B2C sales.
- I have aligned order data, transport documents, commercial invoices and declarations.
- I have checked product, labelling and responsible-operator obligations before listing the goods.
Which documents and records should you keep?
You need to be able to support the customs and VAT treatment you have chosen. Exact documents depend on the product, country and each party’s role, but consistent records reduce the risk of a border hold or a request from an authority.
Customs and commercial file
Prepare, at a minimum, an accurate product description, tariff code to be confirmed, quantity, value, currency, agreed Incoterm, country of origin, party details and transport references. The guide to commercial invoice requirements for EU imports is especially useful for a first shipment.
Also retain the evidence behind the declared price: supplier order, invoice, sales terms, transport charges and, where relevant, proof of payment. Customs value should not be improvised when the carrier asks for information.
VAT and sales data
For IOSS or OSS, retain the transaction information needed for your returns: destination country, sale date, amount paid, rate applied, currency, returns and refunds. Check detailed record-keeping and retention requirements with your Member State of identification or tax adviser.
If you sell through a marketplace, establish its VAT role for each transaction. A platform may be treated as the deemed supplier in circumstances set out in VAT rules, but that does not automatically remove your own import, stock, product-compliance or registration obligations.
Which mistakes lead to costs, delays or incorrect VAT returns?
Most errors arise from confusing the customs entry, the customer sale and the stock location. The result can be a held parcel, a request for evidence, VAT charged to the customer on delivery or a return that needs correction.
Confusing IOSS, EORI and a VAT number
An EORI identifies an operator for customs formalities. IOSS is a VAT reporting scheme for certain direct imported sales. A VAT number serves other tax obligations. None of these identifiers automatically replaces another.
Read EORI vs VAT number vs IOSS: which do you need to sell in Europe? to avoid giving the wrong identifier to a carrier or logistics provider.
Using IOSS for stock imported into a warehouse
IOSS is not designed for importing pallets that will be stored in the EU before future sales. In that scenario, the goods are imported before the distance sale takes place, so import VAT and stock-related obligations must be dealt with separately.
Assuming OSS removes all local obligations
OSS simplifies certain reporting, but it does not necessarily cover domestic sales in a storage country or every type of transaction. A seller holding stock in Germany may have German obligations even when using OSS for deliveries to consumers in other Member States.
Treating tax compliance as a substitute for product compliance
A correctly declared parcel can still be removed from a marketplace or subject to market-surveillance action if the product is non-compliant. Regulation (EU) 2023/988, the General Product Safety Regulation, sets requirements for consumer products and distance sales, while Regulation (EU) 2019/1020 on market surveillance and product compliance provides the framework for enforcement and checks.
Before publication, the Marketplace Product Compliance Scanner can flag traceability, safety and compliance information to verify on an Amazon, eBay, Etsy, Shopify or other marketplace listing. For CE-marked products, also check the sector-specific rules: CE marking cannot be applied without the manufacturer’s conformity assessment, technical documentation, required testing and EU declaration of conformity.
Which special cases should you plan for?
Special cases do not change the core principle: follow the goods and identify each actor’s role. They do, however, require a closer review before shipping or opening a new country.
Amazon FBA, multi-country stock and internal transfers
If Amazon moves your goods between European warehouses, you need to know every country in which stock may be held. Internal transfers and the domestic sales that follow can have VAT consequences. Do not rely only on the country of your Amazon storefront or where you receive payment.
Example: you import a batch into the Netherlands and Amazon later transfers it to Germany. Import VAT is assessed on entry, while the presence of stock in Germany must be reviewed for local obligations and sales dispatched from there.
Excise goods and higher-value consignments
Excise goods do not fall within IOSS. Consignments with an intrinsic value above EUR 150 must also be assessed under the ordinary import process. Ask the customs declarant and competent authority how your product and flow should be handled, particularly where value, composition or origin is complex.
Great Britain and Northern Ireland
Great Britain is outside the European Union for the customs and VAT rules governing these flows. An EU EORI does not necessarily replace a GB EORI for UK operations. The GB and XI EORI guide for Great Britain and Northern Ireland explains the distinctions to check, and GOV.UK — Get an EORI number describes the UK process.
Regulated products and sales information
Toys, electrical equipment, radio equipment, cosmetics, textiles and other categories may be subject to additional sector rules. For example, radio equipment is governed by Directive 2014/53/EU on radio equipment. VAT treatment does not validate product safety or labelling.
For a non-EU seller of consumer products, an EU-established responsible person may be required under GPSR depending on the supply chain. The GPSR Responsible Person service becomes active only after product review, entity assignment, a signed mandate and active payment; a SaaS subscription alone does not appoint a representative.
Tools and services to take action
- EU Market Entry Compliance Assessment: use it before a first shipment or a new country launch to identify checks for EORI, VAT, GPSR, CE marking, packaging and related obligations.
- EORI file preparation: use this service when you need to prepare an EORI application file; the competent customs authority issues the number.
- Customs cost simulator: use it to structure known import costs, including customs value, duty where a valid rate is available and import VAT.
- EU VAT calculator: use it to compare domestic, intra-EU, import, OSS and IOSS VAT scenarios using your transaction data.
- EU Seller Kit pricing and plans: consult this page for SaaS plans and relevant add-on services.
Frequently asked questions
Is IOSS compulsory when selling from China to EU customers?
No. IOSS is an optional scheme for certain low-value distance sales of imported goods. Without IOSS, VAT may be collected through another mechanism at import, so you need to plan the customer experience, customs data and carrier process.
Can I use OSS if my business is outside the EU?
It depends on the OSS scheme, your establishment, your flows and whether an intermediary is involved. A non-EU business that holds goods in the EU should first assess import obligations, the storage country and sales made from that stock. Check your position with the competent tax authority or a qualified tax professional.
Does IOSS remove customs duty?
No. IOSS is a VAT mechanism, not a general customs-duty exemption. Any duty depends on factors including tariff classification, origin, value and measures applying to the product.
Do I need an EORI number to use IOSS?
IOSS and EORI have different functions. EORI is used for customs formalities by the relevant operator, while IOSS is used to report VAT on certain imported distance sales. Review the importer’s and declarant’s roles to identify the numbers needed for your flow.
Does a marketplace automatically handle all my VAT?
Not necessarily. Some platforms may be treated as the deemed supplier in specific cases, but that does not automatically settle your obligations relating to stock, importation, product compliance or registration. Read the marketplace terms and assess the tax treatment of each real goods flow.
What happens if the customer refuses to pay VAT on delivery?
Where VAT is due on delivery, the carrier may hold or return the parcel under its procedures and transport terms. For eligible transactions, IOSS can reduce this risk by collecting VAT at the point of sale, but it requires accurate data and correct reporting.
Official sources
- European Commission — VAT One Stop Shop (OSS / IOSS) — explains the VAT one-stop-shop schemes for relevant sales.
- Council Directive 2006/112/EC — common system of VAT — provides the EU VAT framework, including rules relevant to certain distance sales.
- Regulation (EU) No 952/2013 — Union Customs Code — sets customs formalities and procedures for imports.
- European Commission — Economic Operators Registration and Identification (EORI) — explains EORI identification for customs operations.
- European Commission — EORI number validation — allows public validation of an EORI number.
- European Commission — TARIC consultation — provides tariff and customs measures to check for goods.
- Regulation (EU) 2023/988 — General Product Safety Regulation — sets consumer-product safety requirements, including for distance sales.
- Regulation (EU) 2019/1020 — market surveillance and compliance of products — covers market-surveillance and product-compliance controls in the EU.
- Directive 2014/53/EU — radio equipment — sets sector-specific requirements for radio equipment.
- GOV.UK — Get an EORI number — explains the UK EORI application process.
This content provides general information and is not legal, customs or tax advice.