If you sell from China to EU consumers online, VAT is no longer something you handle at the border once a year. Since July 2021, every parcel imported into the EU is subject to VAT, and the EU created the Import One-Stop Shop (IOSS) to let sellers collect and declare it digitally at the point of sale. Get IOSS wrong and your customers face surprise customs charges at delivery; get it right and checkout feels seamless. This guide explains the EU import VAT rules, how IOSS works, the OSS vs IOSS difference, marketplace collection, and how to register.
The 2021 Change: No More 22 Euro Exemption
Before July 2021, low-value consignments under €22 were exempt from import VAT. That exemption was abolished. Today, all goods imported into the EU are subject to VAT, regardless of value. The change aimed to level the playing field between local EU sellers and non-EU online sellers, who had undercut EU prices by avoiding VAT.
Two parallel systems now cover e-commerce VAT:
- IOSS (Import One-Stop Shop): for distance sales of imported consignments with an intrinsic value not exceeding €150.
- OSS (One-Stop Shop): for sales within the EU of goods already inside the EU, and for B2C services — not for imported goods.
How IOSS Works
IOSS lets a seller collect VAT at checkout, in the rate of the buyer’s EU country, and declare and pay it once per quarter through a single IOSS registration in one EU member state. The key benefits:
- The parcel enters the EU already VAT-paid, so the customer is not charged VAT at the door.
- Only customs duties (above the duty threshold) may apply — no VAT collection at import.
- One registration covers all 27 EU member states.
IOSS is only valid for consignments up to €150 intrinsic value. Above €150, you must use the normal import procedure: VAT is paid at the border, usually by the importer of record.
Platforms Collect VAT for You
Under the same 2021 rules, electronic marketplaces — Amazon, eBay, AliExpress-style platforms — are deemed to have facilitated the sale and become responsible for collecting and remitting VAT on eligible imports. If you sell through these platforms, the platform usually handles IOSS automatically; you still need to understand it because it affects your pricing and what you tell customers. If you sell through your own website (DTC), you register IOSS yourself or use an intermediary.
IOSS, DDP, and Importer of Record
IOSS is not the same as DDP. Under IOSS, the parcel is treated as imported for the end consumer with VAT prepaid; under a DDP arrangement, the seller (or their nominated importer) acts as importer of record and handles duty and VAT themselves. Many China-to-EU sellers combine IOSS at checkout with a local EU fulfilment model. Above €150, DDP with a proper EU importer of record is the standard route.
How to Register
- Non-EU sellers must use an EU intermediary fiscal representative to register for IOSS — they cannot register directly in most member states.
- Register in one member state (commonly Ireland, Luxembourg, or the Netherlands for English-speaking administration).
- Receive an IOSS number, which must appear on the customs declaration and on the parcel.
- File a quarterly IOSS return and pay the collected VAT.
Pricing and Clearing Impact
Because VAT is now in the customer-facing price, your listed prices must be VAT-inclusive for each destination country. Forgetting to include VAT makes your product appear cheaper at checkout but generates a margin hit when you remit it later. At the border, a parcel with a valid IOSS number clears faster than one without; customs can block IOSS shipments that exceed €150 or that lack the number.
Common Mistakes and Practical Tips
The most common IOSS mistake is including shipping or insurance in the intrinsic value calculation. The €150 limit applies to the intrinsic value of the goods, not the landed price; but under-declaring value to stay under the threshold is a customs fraud risk. A second mistake is letting customers see a price excluding VAT and then charged at delivery — that produces refusal of delivery and returns. Show VAT-inclusive prices in the checkout.
For parcels above €150, plan a DDP solution with a registered EU importer of record, because sending them under IOSS is invalid and will be rejected. Keep your IOSS number on every parcel label and customs declaration so the courier can clear it as a VAT-paid import. If you sell through marketplaces, confirm the platform is remitting IOSS on your behalf and reconcile it against your own sales data. With the right setup, EU checkout can be as smooth as domestic delivery.
If you use a fulfilment warehouse inside the EU, sales to EU consumers from that warehouse are domestic EU sales — use OSS, not IOSS. Mixing the two is a common source of error. Confirm with your accountant which regime applies to each sales channel before you file.