Benefits of Import One Stop Shop (IOSS)
For brands selling or importing goods into the European Union (EU), the July 1, 2021 VAT reforms introduced several ways to manage value-added tax (VAT) on cross-border ecommerce shipments. (And if you’re wondering what tax changes we’re referring to, head over to our EU VAT Compliance Basics breakdown!)
Today, non-EU sellers shipping goods directly to EU consumers can use several methods to account for import VAT, including:
- Standard Customs Procedure
- Special Arrangement
- Import One Stop Shop (IOSS)
IOSS was introduced to simplify VAT collection for low-value ecommerce imports and improve the delivery experience for EU customers. While the EU continues to evolve its customs framework — including changes to the €150 customs duty exemption threshold — IOSS remains an important tool for streamlining VAT compliance and reducing friction at the point of delivery.
Below, we’ll break down how IOSS works and highlight five key benefits brands should consider.
What Is Import One Stop Shop?
Import One Stop Shop (IOSS) is the European Commission’s answer to having to register for a VAT number in each country where business takes place. Brands would just need to register on the IOSS portal of an EU Member State, using their IOSS number for any of the 27 EU Member States.
Something to note about IOSS is that unless a company is already an EU-established business, they will need to either establish themselves as an entity within the country they file for IOSS or they will need to find a fiscal intermediary in the country they wish to register for IOSS in.
So, what’s so great about IOSS? Why should brands consider this as an option to account for VAT on orders sold in the EU?
How Does IOSS Work?
Here’s a simplified overview of how the IOSS process works for ecommerce shipments entering the EU:
- A customer places an order online
- VAT is calculated and collected at checkout
- The seller or marketplace collects the VAT payment
- The IOSS number is included in the customs declaration data
- The shipment clears customs in the EU
- The seller submits a monthly IOSS VAT return covering all eligible EU sales
This process helps reduce customs friction because import VAT has already been collected before the package arrives in the destination country.
However, it’s important to note that IOSS simplifies VAT collection — it does not eliminate customs duties or other import requirements that may apply under EU customs regulations
Who Can Register for IOSS?
Non-EU ecommerce sellers, marketplaces, and intermediaries can register for IOSS.
Businesses established outside the EU typically need to appoint an EU-based intermediary unless they are located in a country with a qualifying agreement with the EU.
Because IOSS requirements can vary depending on business structure, fulfillment model, and shipping strategy, many brands work with logistics and compliance partners to manage registration and reporting obligations.
Top 5 Benefits of IOSS
1. Simplified and Faster Customs Clearance
The good news is that clearance through customs should be simplified and faster as import VAT does not have to be applied. The European Commission estimates that using the IOSS can reduce cross-border barriers by up to 95% over other methods! IOSS creates a “Green Channel” to expedite customs clearance of IOSS-processed entries.
2. Centralized EU VAT Compliance
IOSS participants can clear customs in any country while other methods must clear customs in the country that the consumer lives in. IOSS allows couriers to ship into one country, clear customs, then deliver anywhere in the EU, reducing risk of transit time delays. This is a major advantage, both from a logistics standpoint of leveraging consolidated air freight rates, as goods can then be moved freely regardless of the end destination of each package.
3. Reduced Delivery Fees and Customer Changes
Other methods that require the courier to collect VAT on the consumer’s behalf will be hit with a customs clearance fee of €5 to €15 per shipment, depending on the country of collection. This is in addition to other courier charges like a disbursement fee, a minimum customs clearance fee, and any other customs brokerage fees that they may tack on. Since customers do not have a negotiated rate with the carrier, they pay the list rates, which often have set minimums. For example, UPS will charge xx in a “disbursement fee” for paying duties and taxes on behalf of the customer.
Unexpected import charges are one of the biggest causes of cart abandonment and delivery dissatisfaction in cross-border ecommerce.
IOSS helps create a more transparent landed cost experience by allowing customers to see VAT charges upfront before completing their purchase.
As EU consumers increasingly expect Delivered Duty Paid (DDP)-style experiences, transparency around VAT and import costs has become increasingly important.
4. Reduced VAT Rate on Certain Goods
Some food, healthcare, personal care, and medical products may be eligible for a reduced VAT rate. However, this rate can only be claimed for goods processed under IOSS — the Member State’s general VAT rate will apply to all other clearance methods.
5. Easier VAT Adjustments for Returns
For goods that are returned and re-exported, sellers who use IOSS can reclaim the VAT paid on that shipment. Since VAT is reported monthly, IOSS participants can simply reverse the charge and save themselves the time, headache, and cash outlay of paying VAT on import and reclaiming it when the product is returned to a non-EU country.
IOSS and Upcoming EU Customs Reforms
The EU is currently moving forward with customs reforms that include removing the €150 customs duty exemption threshold for low-value ecommerce imports.
While these reforms may change how customs duties are applied to imported goods, IOSS is still expected to remain an important mechanism for simplifying VAT collection and improving cross-border ecommerce operations.
As the regulatory landscape evolves, brands should continue monitoring:
- customs duty changes
- VAT compliance obligations
- marketplace liability rules
- landed cost transparency requirements
- EU ecommerce import regulations
Next Steps For EU VAT Compliance Through IOSS
We encourage brands to determine what makes the most sense for your business and weigh all your options when it comes to EU VAT compliance. IOSS is a great option for brands and your friends at Passport are here to help! Feel free to contact our team to set up an exploratory call and learn more about how to best navigate the international shipping space.
Frequently asked questions
What is IOSS?
Import One Stop Shop (IOSS) is an EU VAT reporting system designed to simplify cross-border ecommerce sales into the European Union. It allows businesses to collect, report, and remit VAT for eligible EU orders through a single registration instead of registering separately in multiple EU countries.
What is an IOSS number?
An IOSS number is a unique identification number assigned to businesses registered under the Import One Stop Shop scheme. The number is used during customs clearance to confirm that VAT was collected at checkout and will be remitted through the IOSS system.
What is an IOSS number used for in shipping?
An IOSS number is shared electronically with customs authorities and carriers during shipment processing. It helps customs verify that VAT has already been paid by the customer, which can speed up customs clearance and reduce delivery delays or surprise fees at delivery.
What is IOSS in customs declarations?
In customs declarations, IOSS identifies shipments where import VAT has already been collected at the point of sale. Including a valid IOSS number in customs data helps ensure the shipment is processed correctly under the IOSS framework.
Does IOSS apply to all shipments?
Under current EU rules, IOSS generally applies to imported goods in consignments valued at €150 or less that are sold directly to EU consumers. Shipments above that threshold typically follow standard import VAT and customs procedures.
What are the main benefits of using IOSS?
Some of the biggest benefits of IOSS include:
- Faster customs clearance
- Centralized VAT reporting across EU countries
- Reduced customs handling fees
- Improved delivery experience for customers
- Easier VAT refunds on returned goods
Does IOSS reduce customs duties?
No. IOSS simplifies the collection and remittance of import VAT, but it does not eliminate customs duties. Depending on the shipment value, product classification, and future EU customs reforms, duties may still apply.
How does IOSS improve the customer experience?
With IOSS, VAT is collected at checkout instead of at delivery. This helps customers avoid unexpected fees, customs payment requests, and shipment delays once the package arrives in the EU.
Do marketplaces use IOSS?
Yes. Many online marketplaces and ecommerce platforms use IOSS to manage VAT collection on eligible EU orders. However, direct-to-consumer brands selling through their own websites may also benefit from maintaining their own IOSS registration.
Can businesses reclaim VAT on returned orders through IOSS?
Yes. If goods are returned and re-exported outside the EU, businesses using IOSS may be able to reverse the VAT reported on those transactions through their monthly IOSS filing process.
Is IOSS still relevant with upcoming EU customs reforms?
Yes. While the EU is making changes to the €150 customs duty exemption threshold, IOSS is still expected to remain an important tool for simplifying VAT compliance and improving cross-border ecommerce operations.
