IOSS Explained: Import One-Stop Shop for EU Cross-Border Sales Under €150

If you sell physical goods to EU consumers from outside the EU, IOSS is the mechanism that lets you collect VAT at checkout and remit it in a single monthly return — rather than leaving your customers to pay customs VAT at the border. It applies to goods valued at €150 or less. Get it wrong and your packages get held at customs, customers abandon deliveries, and your return rate spikes.

This guide explains how IOSS works, who needs it, how the €150 threshold applies in practice, and what goes on the invoice.

What Is IOSS?

IOSS — the Import One-Stop Shop — is an EU VAT simplification scheme introduced on 1 July 2021. It allows non-EU sellers (and EU sellers shipping from outside the EU) to register for VAT in a single EU member state and collect, declare, and pay VAT on sales to EU consumers through one monthly return — instead of registering for VAT separately in each of the 27 EU member states where they have customers.

Before IOSS, goods valued under €22 were VAT-exempt at import, which created widespread abuse (under-declaration of values). IOSS removed that exemption entirely. Now, all goods — regardless of value — are subject to VAT when entering the EU. IOSS just determines who pays it and when: the seller at checkout, rather than the buyer at the border.

Who Needs IOSS?

IOSS is relevant for:

• Non-EU sellers shipping goods from outside the EU directly to EU consumers (B2C) — for example, a US, UK, or Australian retailer selling to customers in Germany, France, or Spain
• EU sellers shipping from a non-EU location — for example, an Irish company that warehouses goods in the UK and ships to EU consumers
• Online marketplaces — if a marketplace facilitates the sale (for example, Amazon, eBay, or Etsy), the marketplace is the "deemed supplier" and is responsible for IOSS compliance, not the underlying seller

IOSS does not apply to:

• B2B sales (reverse charge or import VAT rules apply instead)
• Goods already in the EU (OSS applies for those)
• Goods over €150 per consignment (normal customs/import VAT applies)
• Excise goods (alcohol, tobacco, certain energy products) — excluded regardless of value

The €150 Threshold — How It Works in Practice

The €150 IOSS threshold applies to the intrinsic value of the goods per consignment — not the total order value, not the shipping cost, and not per individual item.

The threshold is assessed at the time of customs declaration. If you under-declare the value to stay under €150, customs authorities can and do audit parcel values — under-declaration is a customs offence, not just a VAT issue.

How IOSS Works — Step by Step

1. Register for IOSS: Non-EU sellers must register in an EU member state. If your business has no EU establishment, you typically need a fiscal intermediary (an EU-established intermediary who becomes jointly liable for the VAT). The intermediary requirement varies by country — some non-EU countries have bilateral agreements that allow direct registration without an intermediary.
2. Display destination-country VAT rates at checkout: When an EU consumer adds items to their cart, your system must detect their destination country and apply the correct local VAT rate. Germany is 19%, France 20%, Italy 22%, Ireland 23%, for example. The VAT must be visible at checkout — it cannot be added later.
3. Collect VAT at checkout: The customer pays the goods price plus the destination-country VAT rate. You collect the VAT.
4. Include your IOSS number on the customs declaration: Your IOSS number goes on the customs declaration (CN22 or CN23) for each parcel. This tells customs the VAT has been pre-paid — the parcel should clear without the buyer paying VAT again at the border.
5. File a monthly IOSS return: One return, covering all EU sales under IOSS for that month, broken down by destination country. The return goes to the member state where you registered. One payment, one return, 27 jurisdictions covered.

What Goes on the Invoice?

For IOSS transactions, the invoice must include:

• Your IOSS registration number (IM + 10 digits)
• The destination country's VAT rate applied
• The VAT amount charged
• Tax code: S (standard rated) — IOSS sales are charged at the destination country's standard or reduced rate, not zero-rated

The IOSS number must also appear on the customs label or declaration — customs systems use it to identify that the VAT has already been collected and remitted.

What Happens Above €150?

For goods where the consignment value exceeds €150, IOSS cannot be used. Normal import rules apply:

• The buyer pays import VAT (and potentially customs duty) at the border
• The customs authority or carrier charges the buyer directly
• You, as the seller, do not collect VAT at checkout for these orders

Many international sellers split their fulfilment strategy: IOSS for lower-value orders, Delivered Duty Paid (DDP) Incoterms for higher-value orders where the seller wants to offer a landed price experience without border surprises.

IOSS vs OSS: What's the Difference?

A common mistake is using IOSS for goods already warehoused inside the EU — that is simply wrong; those goods are already in free circulation in the EU and use OSS (or direct country registrations) instead.

Related Reading

• EU VAT Reverse Charge: A Complete Guide — the B2B counterpart to IOSS's B2C rules
• VAT Number Validation Guide 2026 — validating business buyers before applying B2B treatment
• Tax Calculations — automatic destination-country VAT rates at checkout