IOSS: How the EU Import VAT Simplification Scheme Works

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VAT rules before July 2021

Until 1 July 2021, goods worth up to EUR 22 could be imported into the EU without VAT (the low-value consignment relief). The aim was to spare customs authorities from checking many shipments with little tax at stake. EU sellers were at a price disadvantage because they had to charge VAT, and the relief encouraged abuse such as understating the value of goods. We also cover these changes in our article on new VAT rules for imported goods.

Changes from 1 July 2021

From 1 July 2021 the EU abolished the VAT exemption for imports up to EUR 22. VAT is due in the EU country to which the goods are delivered, including on consignments worth up to EUR 150. This means goods shipped directly from the United Kingdom to consumers in the EU are subject to VAT of the customer's country.

Customs duty: from 1 July 2026 the duty relief for consignments up to EUR 150 was abolished (Council Regulation (EU) 2026/382); for a transitional period until 1 July 2028 a flat-rate duty of EUR 3 per tariff item is provided for – check the national customs authority's current guidance for which consignments it covers. Above EUR 150, duty is charged at tariff rates. IOSS does not cover duty, only VAT. More: the end of the EUR 150 exemption on parcels from the UK.

What IOSS is

Declaring and paying VAT in every EU Member State would be burdensome, so the EU introduced IOSS for imported goods worth up to EUR 150. If the seller is not registered for IOSS, the buyer generally pays import VAT on delivery, often together with the carrier's customs handling fee. Registering for IOSS removes such unexpected charges.

Registering for and using IOSS

Registering for IOSS requires one VAT return, and the tax office splits the tax between Member States. IOSS returns are filed monthly. A seller established outside the EU generally registers for IOSS through an intermediary established in the EU.

Example: a company sells a toy to a German customer for EUR 15. The seller can either not charge VAT at the point of sale and tell the customer they will pay import VAT on delivery, or register for IOSS and charge German VAT at checkout.

Summary

If all your sales to EU consumers are EUR 150 or less, registering for IOSS should reduce administration and improve customer satisfaction. Consignments above EUR 150 are excluded from the scheme, so with a mixed range it may be simpler to settle VAT the same way for all shipments. Need help with e-commerce clearance? See e-commerce imports from the UK or get in touch.

Frequently asked questions