Selling to EU customers from outside the EU: VAT and rules

Selling into the EU from outside it isn't hard, but the VAT rules trip up sellers constantly — usually in the worst possible way: a customer gets a "pay before delivery" demand from the courier and never buys from you again. This guide explains how EU import VAT actually works for non-EU sellers, what the IOSS scheme does for consignments up to €150, and what's changing at the border in 2026.

The one rule to internalise: VAT is always due

There is no longer a "too small to bother" threshold for VAT. Until mid-2021 the EU exempted imported goods worth €22 or less from import VAT. That exemption was abolished on 1 July 2021, so every commercial parcel entering the EU is now subject to VAT from the first cent [European Commission — Taxation and Customs Union].

The question is not whether VAT is paid, but when and by whom:

• You collect it at checkout and hand it to the EU tax authorities yourself (the tidy way), or
• The courier collects it from your customer on delivery, usually with a handling fee bolted on (the way that generates angry emails).

The IOSS scheme exists to let you do the first.

IOSS: how it works for consignments up to €150

The Import One-Stop Shop (IOSS) launched on 1 July 2021 alongside the removal of the €22 exemption. It's a VAT simplification for business-to-consumer distance sales of goods imported from outside the EU in consignments with an intrinsic value not exceeding €150, excluding goods subject to excise duty (alcohol, tobacco) [European Commission — VAT One Stop Shop].

Here's the flow:

1. At checkout, you charge the customer the VAT rate of their own country — Germany's 19%, Ireland's 23%, and so on. (An EU VAT calculator is handy for pricing this correctly per destination.)
2. You put your unique IOSS identification number on the shipping data so the parcel clears customs without VAT being charged again at the border.
3. You file one monthly IOSS return in a single EU member state and pay the VAT you collected across all destinations there.

The payoff is real: the customer pays a clean, all-in price at checkout and nothing is demanded on delivery. No surprise fees, no held parcels, far fewer refused deliveries. For a non-EU seller, that difference alone often pays for the compliance.

The catch for non-EU sellers

If your business is not established in the EU, you generally cannot register for IOSS directly. You must appoint an EU-established intermediary (a tax representative) who registers for IOSS on your behalf and is jointly responsible for the VAT. That's an added cost and something to line up before you start shipping, not after.

If you'd rather not use IOSS, the alternative is the special arrangements: the postal operator or courier collects the import VAT from your customer at delivery and remits it. It's less work for you but pushes the friction onto the buyer — and the standard rate of the destination country applies.

Above €150: IOSS doesn't apply

IOSS only covers consignments up to €150. For anything above that intrinsic value:

• IOSS cannot be used.
• Normal import VAT is due at the border, alongside any customs duties.
• The VAT and duty are typically collected from the customer by the carrier, or handled under standard import procedures with a customs declaration.

A practical trap: "intrinsic value" is the price of the goods themselves, excluding transport and insurance shown separately. Splitting a large order into multiple sub-€150 parcels to stay inside IOSS is not a loophole — customs authorities treat artificially split consignments as one. Ship honestly.

What's changing in 2026: the €150 customs duty exemption

This is the part sellers are getting wrong right now, so read it carefully — because it mixes up two different taxes.

Today there are two separate thresholds around €150:

• VAT: due from €0 (IOSS covers up to €150). Not changing.
• Customs duty: parcels under €150 are currently exempt from customs duty (though still subject to VAT and a customs declaration).

That customs-duty exemption is being scrapped. In November 2025 the EU Council agreed to remove the €150 customs duty exemption and introduce a temporary flat customs duty — reported at €3 per item — as an interim measure until the new EU Customs Data Hub is operational around 2028, after which normal duties (which vary by product type) will apply [European Commission — Taxation and Customs Union, Nov 2025; Council agreement]. Exact start dates and the fee mechanics were still being finalised through 2026, so confirm the current position before you commit pricing.

What this means in plain terms: VAT still works exactly as described above — IOSS up to €150 remains the right tool. What's new is that low-value parcels will also start attracting a small customs charge that used to be zero. Build that into your landed-cost pricing so it doesn't erode margin or, worse, land on your customer as another surprise.

For a fuller walkthrough of the VAT machinery — including OSS for goods you hold inside the EU — see our companion guide on EU VAT for ecommerce (OSS & IOSS). If you're at an earlier stage, our overview of how to start an online business in Europe sets the wider context.

A practical checklist for non-EU sellers

• Register for IOSS (via an EU intermediary) if you sell B2C consignments up to €150 — it's the single biggest lever on customer experience.
• Charge destination-country VAT at checkout and display an all-in price. Use an EU VAT calculator to get the rates right.
• Put your IOSS number on the shipping data for every eligible parcel, or customs may charge VAT a second time.
• File the monthly IOSS return on time in your chosen member state.
• For orders over €150, be transparent that import VAT and duty apply, and decide whether you or the carrier handles collection.
• Factor in the coming flat customs duty on low-value parcels from 2026 so your margins and prices already account for it.

This is general information, not legal or tax advice — rules vary by country and change; confirm with a qualified professional before acting.

Turn compliance into a smoother checkout

Getting VAT right isn't just a tax exercise — it's a conversion problem. A checkout that shows the correct destination VAT, an all-in price and no nasty delivery surprise sells more. We build storefronts and checkout flows that handle EU VAT cleanly for cross-border sellers: see web development. If you'd like to talk through your specific setup — IOSS, intermediaries, pricing by country — book a free consultation and we'll point you in the right direction.