IOSS

What it means

IOSS is the special scheme for distance sales of goods imported from third countries to EU consumers where the consignment value does not exceed EUR 150. The seller charges VAT at the point of sale and remits it in one monthly return in the state of identification.

The customer then pays nothing extra on delivery and the parcel clears customs without import VAT being collected. That is the main reason the scheme is used - the parcel does not get stuck with the carrier.

IOSS is optional. A seller who does not use it leaves VAT to be collected on import: the carrier or the post office then charges the customer on delivery, usually adding its own fee for handling the customs procedure. A seller based outside the EU generally cannot register for the scheme directly and needs an intermediary established in the Union.

How it works in practice

It is used by shops importing from Asia and by marketplaces, which on such sales are deemed the supplier and account for the tax on sellers’ behalf. Registration happens in one member state and the IOSS number is quoted on the customs declaration.

It is related to OSS but covers something else: OSS covers goods already in the Union and services, IOSS covers only the import of low-value consignments.

The monthly IOSS return is built from webshop data: the customer’s country, the VAT rate that applies there and the consignment value. When we process it we reconcile it with orders and returned parcels, because a return is corrected in a later return rather than by rewriting the original one. The seller must keep records of every sale for ten years and make them available on request.

What to watch out for

Above EUR 150, or for excise goods, IOSS cannot be used and the standard import regime applies. The IOSS number is never given to third parties outside the supply chain - misuse means tax collected in your name.

A frequent failure is technical: the IOSS number never reaches the carrier in the electronic shipment data. Customs then collects import VAT a second time, the customer pays twice, and the seller ends up handling both a complaint and a tax refund. With dropshipping, where the supplier sends the parcel, the transfer of the number is checked on the very first shipments.