IOSS explained: VAT on low-value imports for EU sellers & dropshippers (2026)

If you ship physical goods into the EU from outside it — or run a dropshipping store that does — there’s a piece of VAT plumbing you can’t ignore. Since 2021, every commercial parcel entering the EU carries import VAT, no matter how cheap. IOSS is the scheme that lets you handle that cleanly at checkout instead of ambushing your customer at their front door. Here’s the plain-English version, with the verified rules.

What actually changed in July 2021

Before 1 July 2021, commercial goods imported into the EU with a value below €22 were exempt from import VAT. That low-value consignment exemption was abolished. Since then, import VAT applies to all commercial goods imported into the EU regardless of value — even a €3 phone case.

The problem this created for buyers is obvious: a cheap parcel that used to slip through now attracts VAT, and if the seller doesn’t handle it, the carrier collects it at delivery — usually with a handling fee bolted on. A customer expecting a €10 trinket gets asked for VAT plus a few euros of carrier admin before they can have their parcel. That’s a refund request and a bad review waiting to happen.

What IOSS does

The Import One-Stop Shop (IOSS) is the fix. It’s an optional scheme that lets you:

• Charge EU VAT at the point of sale — the customer pays the correct VAT as part of the checkout total, with nothing extra owed on delivery.
• Register once for an IOSS number rather than registering in every member state you ship to.
• File a single monthly IOSS return, remitting all the VAT you collected on covered imports across the EU in one go.

Because the VAT is already accounted for, the parcel clears customs faster and the buyer’s experience looks like a normal domestic purchase. For a one-person store, that smoother delivery is often worth as much as the compliance tidiness.

The €150 ceiling

IOSS is for low-value consignments: it covers parcels with an intrinsic value not exceeding €150. Intrinsic value broadly means the price of the goods themselves, separate from things like transport or insurance shown on the invoice — but treat that definition carefully and confirm it for your shipments.

Above €150, you’re outside IOSS. The normal import procedure applies: import VAT, and potentially customs duty, is handled at the border in the usual way rather than collected at checkout. So IOSS is specifically a tool for the high-volume, low-ticket end of cross-border physical sales — exactly where dropshipping lives.

Who IOSS actually helps

• Dropshippers shipping goods from suppliers outside the EU (a common setup) directly to EU buyers. IOSS is close to purpose-built for this model.
• Any seller sending low-value goods from a non-EU base into the EU, including makers fulfilling EU orders from outside the bloc.

If, instead, your goods are produced and dispatched inside the EU, IOSS isn’t your scheme at all — the VAT follows the physical supply chain, which is the same point that trips up VAT for Amazon, Etsy & print-on-demand sellers: trace where the parcel actually ships from before assuming which regime applies.

Marketplaces often handle IOSS for you

Here’s the part that quietly removes the problem for many small sellers. When you sell through an online marketplace, the marketplace is frequently treated as the deemed supplier for low-value imports and collects and remits the VAT via its own IOSS registration. In that case you don’t need your own IOSS number for those sales — the platform has done it.

The catch is that this only covers sales through that marketplace. If you also sell from your own store, or ship through channels the marketplace doesn’t cover, that side is yours to handle. Don’t infer your obligations from one channel — check, per channel, who is actually accounting for the VAT.

Non-EU sellers usually need an intermediary

If your business is established outside the EU and you want your own IOSS registration, you’ll generally need to appoint an IOSS intermediary — an EU-established party who registers for IOSS on your behalf and is responsible for the returns and the VAT. EU-established sellers can typically register directly. Either way, confirm whether an intermediary is required for your specific setup, as this is one of the most commonly misunderstood parts of the scheme.

IOSS vs OSS vs the SME scheme

These get conflated constantly, so the clean distinction:

• IOSS (Import One-Stop Shop) — for goods imported from outside the EU to EU consumers, consignments up to €150. Monthly return.
• OSS (One-Stop Shop) — for intra-EU B2C sales (goods already in the EU, and cross-border digital services), built around the €10,000 cross-border threshold. Quarterly return. The full mechanics are in EU VAT & OSS explained.
• The cross-border SME scheme — a different lever again: under €100,000 EU-wide turnover it can let a genuinely small business sell VAT-exempt across borders. See the 2025 cross-border SME VAT scheme.

Different schemes, different triggers — the right one depends on where your goods physically come from and what you’re selling.

The takeaway

• Since 1 July 2021, EU import VAT applies to all commercial goods regardless of value — the old sub-€22 exemption is gone.
• IOSS lets you charge EU VAT at checkout on consignments up to €150 and remit it via one monthly return, sparing the buyer a customs surprise on delivery.
• Above €150, you’re back to normal import VAT and customs at the border.
• Marketplaces often handle IOSS for sales through them; your own-store sales are still yours.
• Non-EU sellers usually need an intermediary to register for IOSS.
• IOSS is for imports; OSS is for intra-EU, and the 2025 cross-border SME VAT scheme is the opposite lever again. More context in the e-commerce sellers hub and the EU admin guide. This is exactly the trap in dropshipping and a factor for your own Shopify store.

Part of the complete EU admin guide for solopreneurs.