IOSS for e-commerce: when you actually need it

What IOSS is and why it exists

The Import One Stop Shop (IOSS) is an optional scheme introduced on 1 July 2021 by EU Directive 2017/2455, alongside OSS. It was created to simplify the collection of VAT on imports of low-value goods (up to €150) shipped from non-EU countries to end consumers in the European Union.

Before 2021 there was a VAT exemption for shipments worth less than €22, which was widely exploited by Chinese and other non-EU sellers to offer more competitive prices than European sellers. The EU legislator eliminated this exemption and created IOSS as an alternative tool to ease compliance without blocking the flow of shipments at customs.

How the IOSS mechanism works

IOSS works on a simple principle: VAT is collected at the point of sale, before the goods reach European customs. This way, customs clearance happens faster, without the end consumer having to pay additional amounts to the post office or courier on delivery.

The operational flow is as follows:

1. The non-EU seller (or the marketplace acting as deemed reseller) registers for IOSS in an EU member state — usually through a tax intermediary if not established in the EU
2. At the point of online sale, the consumer is charged VAT at the rate of the goods’ destination country
3. The seller declares and pays the VAT collected monthly through the IOSS portal of the registration country
4. The seller’s IOSS number is shown on the shipment: customs checks it and, if the value is ≤ €150, lets the goods through without further VAT collection

The critical threshold: €150

The €150 threshold is calculated on the intrinsic value of the goods, i.e. the sale price of the goods themselves, excluding:

• Shipping costs (if invoiced separately)
• Insurance (if invoiced separately)
• VAT already included in the price

Note: if a shipment contains multiple items that together exceed €150, IOSS doesn’t apply and the ordinary customs procedure (with VAT paid at customs) is mandatory. You can’t artificially split an order to stay under the threshold — customs can challenge this.

For shipments worth more than €150, the ordinary regime involves:

• Customs duties under the common customs tariff
• Import VAT calculated on the customs value (goods value + duties + shipping)
• Possible simplified procedures via customs regimes 42 or 63

Who needs to register for IOSS

IOSS is optional but strongly recommended for anyone selling physical goods from non-EU countries to European consumers. It’s particularly relevant for:

• Amazon sellers with warehouses in China, the US, the UK who ship directly to the end consumer in the EU (dropshipping model or international FBM)
• Dropshippers who buy from non-EU suppliers and ship directly to the European customer
• Own brands manufacturing in Asia and selling direct B2C into the EU
• Marketplaces acting as deemed reseller for non-EU sellers (Amazon, eBay and Etsy are already registered for IOSS on their platforms)

If you sell exclusively via Amazon FBA in Europe with warehouses already in the EU, IOSS isn’t your relevant scheme — it’s OSS (for intra-community sales) or direct VAT registration in the countries where you hold stock.

IOSS registration: EU residents vs. non-EU residents

Sellers established in the EU: Can register directly for the IOSS scheme in their own country of establishment without intermediaries. In Italy, registration happens through the Agenzia delle Entrate portal, as with OSS.

Sellers established outside the EU: Must appoint an IOSS intermediary (also called an IOSS fiscal representative) established in the EU. The intermediary is jointly liable for remitting the VAT. Intermediary costs range from €50 to €300 per month depending on transaction volume.

IOSS returns: monthly cadence

Unlike OSS (quarterly), IOSS returns are monthly and must be filed by the last day of the month following the reference month. Example: for March sales, the return must be filed by 30 April.

Each IOSS return must state, for each EU destination country:

• Total number of shipments
• Total taxable value (in euros)
• VAT rate applied
• VAT amount due

Returns must be filed even in months with no sales (a nil return).

IOSS and marketplaces: Amazon, eBay, Etsy

An essential point for sellers using marketplaces: Amazon, eBay and Etsy have registered as IOSS deemed resellers for sales facilitated through their platforms. This means that:

• If you sell on the Amazon Marketplace and the goods are shipped from outside the EU with a value ≤ €150, it’s Amazon that handles collecting and remitting the IOSS VAT — not you
• Amazon includes its IOSS number on shipping labels
• In your Amazon dashboard you’ll see the IOSS transactions already handled by the marketplace

However, if you have your own independent e-commerce store (Shopify, your own website) and ship from outside the EU, you’ll need to register for IOSS yourself.

Common mistakes in IOSS management

1. Applying the wrong VAT rate The VAT to apply is that of the end consumer’s country, not the seller’s country of establishment nor the goods’ country of origin. An order shipped from China to a German consumer requires the German rate (19% or 7% depending on the category).

2. Not updating rates EU countries’ VAT rates can change. You need to monitor them and update your calculation system. With VATManager, rates are updated automatically.

3. Exceeding the €150 threshold without noticing If an order’s value exceeds €150, the goods can’t go through under the IOSS scheme. Shipping with an IOSS number on parcels above the threshold anyway is a customs violation that can lead to holds and penalties.

4. Not keeping documentation For every IOSS shipment you need to keep proof of shipment, the declared value and the IOSS number used, for at least 10 years (as required by EU VAT rules).

How VATManager handles IOSS transactions

In Amazon Seller Central reports, IOSS transactions handled directly by Amazon are marked with a specific code in the vat_calculation_service column. VATManager:

• Automatically identifies IOSS rows already handled by Amazon and separates them from OSS transactions
• Generates a separate IOSS summary with any transactions you need to declare yourself
• Flags any borderline transactions (value close to €150) for manual review
• Exports data in a format compatible with national IOSS portals

Having everything in a single dashboard — OSS, IOSS and domestic transactions — gives you full visibility of your VAT exposure ahead of every deadline.