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New EU VAT rules to boost IOSS use and simplify e-commerce imports

The European Union is once again stepping up its efforts to modernise VAT compliance across borders. The goal? To make life easier for sellers, improve tax collection and cut down on fraud.  

One of the biggest updates is a stronger push to use the Import One-Stop Shop (IOSS), a system designed to simplify VAT for businesses that sell goods to EU customers. 

What’s changing? 

  • The responsibility for paying import VAT will shift from the customer to the seller or online marketplace. This will come into effect from 1st July 2028. 
  • More sellers will be encouraged to use IOSS when selling goods under €150 into the EU. 
  • If you don’t use IOSS, you might have to register for VAT in multiple EU countries, which is time consuming and expensive. 

Originally, the EU planned to make IOSS mandatory under the VAT in the Digital Age (ViDA) reforms. However, that idea was dropped.  

Even though IOSS is still optional, not using it could cause problems like shipping delays, higher costs, or unhappy customers who have to pay VAT when their package arrives.  

Why is it important? 

In 2024, the EU handled over 4.6 billion parcels from non-EU countries, that’s about 12 million packages every day. 

The EU wants to ensure VAT is paid fairly and easily, especially with so many online sales coming from outside of Europe.  

What should online sellers do? 

If you sell to customers in the EU, now’s the time to: 

  • Start planning now – even though the rule change takes effect in 2028, early adoption of IOSS can save time and money. 
  • Check if IOSS is right for your business. 
  • Make sure your systems are ready to handle VAT properly and avoid delivery issues.