Register for IOSS and your EU customer pays the VAT at checkout instead of the courier at the door

In this blog: what the Import One-Stop Shop is, who has to register and who does not, how IOSS differs from OSS, why the €3 customs duty introduced in July 2026 still applies to IOSS-registered sellers, and what has to reach the customs declaration on every parcel you send into the EU.

A shopper in Madrid buys a €60 jacket from a British brand. If the seller is registered for IOSS, she pays Spanish VAT at checkout and the parcel reaches her without a second bill. If the seller is not, the courier asks her for the VAT before it hands the parcel over, usually with a clearance charge on top, and the brand hears about it from a complaint.

Both parcels crossed the same border under the same rules. The difference is a VAT registration the seller either holds or does not, and a number the seller either puts on the customs declaration or leaves off.

What is IOSS?

IOSS, the Import One-Stop Shop, is an EU VAT scheme that lets a seller charge import VAT at the point of sale on goods sent to EU consumers in consignments worth €150 or less. One registration works across all 27 member states, and the VAT collected is declared and paid in a single monthly return.

At checkout the customer sees the final price and pays it there. Customs then looks for a valid IOSS number on the import declaration, and where it finds one the goods are released without a second VAT charge.

The first half is a pricing setting in your checkout, while the second depends on what your shipping system sends the carrier, and that is where registered sellers most often come unstuck.

The scheme applies to goods rather than services, and only consignments with an intrinsic value at or below €150. Goods subject to excise duty, alcohol and tobacco among them, stay outside it at any value. Everything else about the import stays normal: since July 2021 every parcel entering the EU needs a customs declaration, whatever it is worth.

How IOSS works, from registration to the monthly return

Registration happens once, in one EU member state. That state issues an individual IOSS VAT identification number in the format IMxxxyyyyyyz, and from that point the seller charges the VAT rate of the country the customer is in rather than the country the goods leave from. A jacket sold to Spain carries Spanish VAT; the same jacket sold to Sweden carries Swedish VAT. The return spans one calendar month across every member state and is due by the end of the following month.

Sellers register differently depending on where they are established. A business established in the EU can register directly. A business established outside the EU has to appoint an intermediary, who must be a taxable person established in the EU and who then becomes the person liable to pay the VAT and to meet the scheme's obligations in the seller's name. One exception applies: a seller established in a third country that has a VAT mutual assistance agreement with the EU, currently only Norway, can register without an intermediary for goods dispatched from that country. A Norwegian retailer shipping from Norway registers on its own. The same retailer also shipping from a Chinese warehouse needs the intermediary.

UK sellers work from the sterling equivalent. HMRC's guidance sets the low value goods threshold at £135 or less per consignment and asks a business that has registered in an EU country to tell HMRC its IOSS number. Sales of goods sitting in Great Britain at the point of sale and going to Northern Ireland stay off the IOSS return and belong on the UK VAT return instead.

The €150 ceiling is measured on intrinsic value, which the Commission's customs guidance defines as the price of the goods themselves, excluding transport and insurance costs where those are shown separately on the invoice. A €148 basket with €10 delivery listed as its own line stays inside the scheme. The same basket sold as one undifferentiated €158 price does not. Fold delivery into one headline price and the same order sits above the threshold, so the invoice layout deserves a look alongside the tax advice.

Do you need an IOSS registration?

IOSS is optional. It becomes relevant when you sell goods to EU consumers from outside the EU in consignments worth €150 or less, and it binds whoever is treated as the supplier for VAT purposes.

Most retailers get their answer from the supplier test rather than the threshold. Where the sale runs through a marketplace, the marketplace is usually the deemed supplier and uses its own IOSS number, so the seller registers nothing for that channel and carries no filing obligation for it. Direct sales through the seller's own site are a separate decision, and they are the reason most retailers register at all. Sell on both and you run two VAT routes side by side out of the same warehouse, which is manageable as long as the shipping system can tell them apart at the point of booking.

Without a registration the VAT still gets collected, at the border rather than at checkout, and by someone else. The Commission's guidance for shoppers says the postal operator or courier may collect the VAT on delivery, and the operator generally adds its own clearance charge for doing so. The retailer keeps the sale either way, and pays for it in the delivery instead: parcels held at customs, a payment request the customer never agreed to, and a share of consignments that come back because nobody paid.

A workable test for a finance team: count last quarter's EU-bound orders under €150, then split them by channel. If most arrived through marketplaces, the registration and the monthly filing may cost more than they return. If most came through your own site, register for what it does to the checkout, and treat the filing as the price of that.

IOSS vs OSS: which scheme covers what

OSS and IOSS are two halves of the same VAT simplification, divided by where the goods start. Sellers use OSS for supplies that are already inside the EU, and IOSS for goods imported from outside it in consignments up to €150.

The One-Stop Shop itself runs three schemes. The Union scheme is for EU-established businesses making intra-EU distance sales of goods and cross-border B2C services. The non-Union scheme is for businesses established outside the EU supplying services to EU consumers. Third comes the import scheme, which everyone calls IOSS.

Plenty of retailers need two of them at once. A UK brand holding stock in Rotterdam and in Leicester uses OSS for the orders it fulfills from the Netherlands into the rest of the EU, and IOSS for the orders it fulfills from the UK. The same customer buying the same basket can fall under either scheme, depending only on which site ships it. Whoever configures order routing therefore has to settle which warehouse fulfills the order, and which VAT mechanism follows from it, before the parcel moves.

Does IOSS exempt you from the €3 customs duty?

No. The temporary €3 customs duty that started on 1 July 2026 applies to IOSS-registered sellers on the same terms as everyone else. The Commission's guidance says the duty applies to all goods in consignments up to €150 sold in distance sales, regardless of VAT scheme, and it names the IOSS holder among the declarants responsible for paying it.

IOSS settles the VAT and nothing more; the €3 duty is a separate charge under customs law. Until July 2026 few sellers had to think about the distinction, because low-value consignments were duty-free anyway. Now a single parcel can carry both charges, and only one of them was ever settled at checkout.

Goods that benefit from a preferential trade agreement or from Customs Union measures fall outside the €3 duty, but only where the VAT was not collected using IOSS and the goods are declared on the full H1 declaration rather than the simplified low-value dataset. A UK seller shipping UK-origin goods to Ireland, or a Norwegian seller shipping EEA-origin goods, gives up that exclusion by putting the consignment through IOSS. Whether that trade is worth making depends on the mix of origin-qualifying goods in the basket and how much the checkout experience is worth, and it is a live question for anyone who thought registering for IOSS was the end of their cross-border compliance work.

Our EU customs changes 2026 guide covers the reform itself and how to prepare for it, and the first month of the €3 duty shows how the charge reached retailers who had assumed it was aimed at marketplaces. One date is still ahead: from 1 November 2026, product identifiers become mandatory for these consignments, so the item-level data behind each declaration has to be accurate as well as present.

Getting the IOSS number onto every customs declaration

You only get the benefit of a registration if your shipping operation puts the number on every declaration it belongs on. Retailers who register and still see VAT charged at delivery usually have the number filed with finance and missing from the shipment data the carrier receives.

The Commission's guidance for member states and trade on low value consignments is blunt about the consequence. Where the IOSS number is invalid or absent from the customs declaration, the import scheme cannot be used and the VAT exemption cannot be granted, so VAT is levied at import. The seller is responsible for providing a valid number, and the shipping system, rather than the finance team, has to satisfy every condition around it. Only one IOSS number can be declared per consignment, so a single declaration cannot mix IOSS and non-IOSS goods. The number has to be available to customs at the latest in the declaration for release for free circulation. Once the goods have been released, it cannot be added, changed, or removed.

The customer, meanwhile, has already paid that VAT at checkout. When the number is missing she pays for the same parcel twice, and the retailer spends the next call explaining a charge it thought it had settled weeks earlier.

nShift Ship, our multi-carrier shipping product, carries the IOSS number as a field in the shipment record and sends it to the carrier with the booking, alongside the rest of the customs data. Where orders arrive from a marketplace through the Linnworks plugin, the marketplace IOSS number can be mapped from the order and passed through without anyone retyping it. The same record holds the customs detail the declaration needs, item descriptions, values and origin at line level plus shipment-level customs information, printed onto CN 22 and CN 23 declarations where a carrier wants the paper form and sent electronically where the carrier supports paperless invoicing. Requirements vary carrier by carrier, which is the practical reason to validate a shipment before it books rather than after a declaration is rejected.

nShift is not a tax adviser. Whether to register, where to register, whether an intermediary is required, and what rate applies to which basket belong with a tax specialist. Once those decisions are made, the work is to carry them into every order, from checkout through the customs declaration to the doorstep, without anyone re-keying a number along the way.

Before the November deadline, identify the EU-bound orders that fall under €150, check which channel they arrive through, and confirm that the IOSS number and item-level customs data reach the carrier on every one of them. Talk to nShift about connecting checkout, shipping, tracking and returns around the same customs data.