IOSS
IOSS and EU VAT for Indian e-commerce exporters
IOSS mechanics and the intermediary requirement. Plus the verified 2026 change: the EUR 150 customs duty relief is abolished, with a flat EUR 3 per item until July 2028.
By Aaryan Kakani · · 11 min read
Does IOSS apply to my exports to EU consumers?
IOSS is the Import One-Stop Shop: an EU VAT scheme for distance sales of goods imported from a third country (India) to EU consumers, in consignments with an intrinsic value not exceeding EUR 150. The scheme lives in arts 369l. 369x of the VAT Directive 2006/112/EC, inserted by Directive (EU) 2017/2455. It is a B2C, goods-dispatched-from-India scheme: if you invoice EU businesses, or you fulfil orders from stock already sitting in an EU warehouse, you are in a different regime entirely and IOSS is not your framework.
The reason IOSS matters at all is that the old EUR 22 import-VAT exemption was abolished on 1 July 2021 (Directive (EU) 2017/2455). Since then, every parcel you ship to an EU consumer attracts EU VAT from the first euro. IOSS is the mechanism that lets you charge the destination member state's VAT at checkout, file one monthly return covering all 27 member states, and get faster customs clearance. Instead of your customer being ambushed on the doorstep with VAT plus a carrier handling fee.
For any low-value parcel there are exactly three routes, and the rest of this guide is about choosing between them:
| Route | Who collects the VAT | Consumer experience | When it fits |
|---|---|---|---|
| Seller's own IOSS | You, at checkout, at the destination country's rate; remitted via your EU intermediary's monthly return | Nothing to pay on delivery | Own-website (Shopify etc.) orders at or under EUR 150 |
| Marketplace deemed-supplier IOSS | The platform (Amazon, Etsy, eBay), under its own IOSS number | Nothing to pay on delivery | Marketplace orders at or under EUR 150 |
| No IOSS (special arrangements / border collection) | Postal operator or courier collects import VAT from the consignee on delivery | VAT plus handling fee at the door; refusal risk | Fallback only; also the default above EUR 150 |
How does the EUR 150 intrinsic-value ceiling actually work?
Intrinsic value means the price of the goods themselves (excluding separately-stated transport and insurance) judged per consignment , not per order or per item. That consignment-level framing has teeth: one order split into two parcels, or two orders combined into one box, changes the analysis. A EUR 200 order shipped as two EUR 100 parcels is not automatically two sub-ceiling consignments.
The verified current position, stated plainly: as of August 2026 the EUR 150 IOSS ceiling for VAT is still in place. The customs-reform proposal to remove it and extend IOSS to all values is still in negotiation and is not law. Any content telling you the ceiling is gone is confusing it with a different EUR 150 rule (next paragraph) or reporting a proposal as if it had been adopted.
What the ceiling gates: IOSS eligibility for VAT and the marketplace deemed-supplier boundary under art 14a both sit at EUR 150. Above it, IOSS cannot be used at all and normal import rules apply. Covered in the above-150 section . There were, until recently, two separate EUR 150 rules, and keeping them apart is now essential:
| EUR 150 rule | What it governs | Status as of August 2026 |
|---|---|---|
| IOSS VAT ceiling | Whether IOSS can be used for the consignment, and whether art 14a makes the marketplace the deemed supplier | Unchanged and in force. Removal is a proposal in negotiation, not law |
| Customs-duty relief | Whether the consignment paid customs duty at all | Abolished 1 July 2026 by Council Reg (EU) 2026/382, replaced by the EUR 3 per-item flat duty (see the flat-duty section) |
Why must an Indian seller appoint an EU intermediary?
The rule, from the European Commission's Register-to-OSS guidance: a seller established outside the EU must appoint an EU-established intermediary to use the IOSS import scheme, unless the seller is established in a third country that has a VAT mutual-assistance agreement with the EU. India has no such agreement (the Commission's 2021 explanatory notes list only Norway (a point from the 2021 notes, not re-verified in 2026)) so an Indian exporter must appoint an intermediary . There is no direct-registration path.
What the intermediary is: an EU-established taxable person who registers you for IOSS, files your monthly IOSS returns, and is jointly liable for the VAT you owe. That joint liability is why intermediaries charge meaningful fees and typically demand a security deposit or a direct debit of the VAT. They are underwriting your compliance to their own tax authority.
Practically: registration through the intermediary gives you one IOSS number valid for all 27 member states , obtained in the intermediary's member state. Typical providers are tax-tech firms and large customs brokers. The seller (not the intermediary) remains responsible for charging the correct destination-country VAT rate at checkout, which means your storefront needs per-country rate tables, not one flat EU rate.
When is the marketplace the deemed supplier instead of you?
Under art 14a(1) of the VAT Directive, an electronic interface (Amazon, Etsy, eBay, Zalando and the like) that facilitates distance sales of imported goods in consignments not exceeding EUR 150 becomes the deemed supplier . Legally, the marketplace, not the Indian seller, is treated as making the sale to the consumer: it accounts for the VAT and typically does so under its own IOSS number, which it passes to the carrier.
Consequences for the Indian seller on those orders: you do not charge EU VAT, and you do not need your own IOSS registration for them. You do have two duties: transmit the marketplace's IOSS number correctly in the shipping data for each marketplace order, and never reuse that number for own-website orders. That is number abuse, and it gets the marketplace's IOSS number revoked for everyone using it.
The verified boundary: the interface is not the deemed supplier for consignments exceeding EUR 150. Those fall back on the seller and consumer under normal import rules. Interfaces must keep transaction records for 10 years, which is why marketplaces are aggressive about collecting your consignment data correctly.
What is the EUR 3 per-item customs duty in force since 1 July 2026?
Council Regulation (EU) 2026/382 of 11 February 2026 made two moves. Article 1 deleted Chapter V of Title II of Regulation (EC) No 1186/2009. eliminating the EUR 150 customs-duty relief that low-value parcels had enjoyed. Article 2 imposes, from 1 July 2026 until 1 July 2028 , a temporary flat customs duty of EUR 3 per item on low-value consignments. It applies to goods (a) declared under the IOSS VAT scheme or (b) sent in postal consignments.
"Per item" means per tariff subheading line, not per parcel . The Commission's own guidance example: one T-shirt plus one watch in a single parcel is two subheadings, so EUR 6. The duty is payable by the declarant (the seller, IOSS holder or special-arrangements user, or their indirect representative) and is not collected from the consumer at the door. It therefore has to be priced into the product.
To repeat the critical distinction: this is customs duty only . The EUR 150 IOSS VAT ceiling and the art 14a deemed-supplier boundary are unchanged. Also on the calendar: product identifiers (PIDs) become mandatory in low-value declarations from 1 November 2026 per the Commission guidance of 8 June 2026, whose implementing rules were published in the Official Journal the same day.
| Parcel contents (one IOSS consignment) | Tariff subheading lines | Flat duty from 1 Jul 2026 | VAT treatment |
|---|---|---|---|
| 3 identical cotton cushion covers | 1 | EUR 3 | Destination VAT via IOSS, charged at checkout |
| 1 cushion cover + 1 brass lamp | 2 | EUR 6 | Destination VAT via IOSS, charged at checkout |
| 1 T-shirt + 1 watch (Commission's own example) | 2 | EUR 6 | Destination VAT via IOSS, charged at checkout |
| Same parcel sent by post WITHOUT IOSS | per item | EUR 3 per item | Import VAT collected from consignee under special arrangements |
| Courier consignment, no IOSS, not postal | n/a | Normal CCT tariff duties | Import VAT at the border under a standard declaration |
What happens above EUR 150. Or if I skip IOSS entirely?
Above EUR 150 intrinsic value, IOSS cannot be used for VAT. Import VAT and customs duty are collected at the border under normal import rules. Either the buyer pays the carrier before delivery (DAP. With a high refusal-and-return risk for D2C parcels), or you ship DDP and the carrier bills the import charges back to you. If the Indian seller becomes importer of record under DDP, it generally needs an EU VAT registration and typically an indirect customs representative. A deliberate structural decision, not a checkout toggle.
For consignments at or under EUR 150 where IOSS is not used , the "special arrangements" of arts 369y. 369zb remain available: the postal operator or courier collects the import VAT from the consignee on delivery and remits it monthly. It works, but it is consumer-hostile. Handling fees, doorstep payment, refused parcels. And low-value goods that are neither IOSS-declared nor postal fall to a standard customs declaration with normal tariff treatment. Which since 1 July 2026 can actually mean normal CCT duty rather than the EUR 3 flat fee. Route choice now has a duty consequence, not just a VAT-experience one.
| Scenario | VAT | Duty | Practical risk |
|---|---|---|---|
| Above EUR 150, DAP | Buyer pays import VAT to the carrier before delivery | Normal CCT tariff duty at the border | Refused parcels and costly returns |
| Above EUR 150, DDP | Seller bears it; importer-of-record status usually means an EU VAT registration | Normal CCT duty, billed back by the carrier | Needs an indirect customs representative; margin exposure |
| At/under EUR 150, no IOSS, postal | Special arrangements: collected from consignee on delivery | EUR 3 per item flat duty | Handling fees and doorstep friction |
| At/under EUR 150, no IOSS, courier (not postal) | Import VAT under a standard declaration | Normal CCT tariff duty. Not the EUR 3 flat fee | Often the worst of both worlds on cost and clearance speed |
Which EU customs reform changes are law today. And which are still proposals?
The EU customs reform generates a steady stream of headlines, and most of the bad planning we see comes from treating proposal-stage rules as if they were in force. The table below is the status of each moving part as of August 2026 , in three buckets: in force, adopted but future-dated, and still a proposal.
| Change | Status (Aug 2026) | Instrument | Effective |
|---|---|---|---|
| EUR 150 customs-duty relief abolished | IN FORCE | Council Reg (EU) 2026/382, Art 1 | 1 July 2026 |
| EUR 3/item flat duty on IOSS + postal low-value consignments | IN FORCE (temporary) | Council Reg (EU) 2026/382, Art 2 | 1 Jul 2026. 1 Jul 2028 |
| Product identifiers (PIDs) mandatory in declarations | Adopted, future-dated | Commission guidance + implementing rules of 8 Jun 2026 | 1 November 2026 |
| EUR 150 IOSS VAT ceiling removed (IOSS for all values) | PROPOSAL. Not law | EU Customs Reform package, in negotiation | Unknown |
| UCC recast, EU Customs Authority, Customs Data Hub | PROPOSAL. Not law | EU Customs Reform package, in negotiation | Unknown |
| Normal CCT duties on all values after flat fee lapses | Intended, not settled | Reform package | After 1 Jul 2028 |
The planning consequence: price for the EUR 3/item world through mid-2028 , watch the reform package for what follows, and do not restructure operations around proposal-stage rules. The IOSS-for-all-values future belongs in your watchlist, not your checkout logic. This page mirrors the verified Commission position and will be updated when the reform package is adopted.
What is the step-by-step IOSS and EU VAT checklist for an Indian exporter?
Run the diagnostic in this order. Each step only makes sense once the previous one has resolved.
The IOSS and EU VAT checklist
- Classify each channel. Marketplace orders: deemed supplier. Collect the platform's IOSS number, feed it into carrier data, do not charge EU VAT. Own-site orders: you need your own IOSS.
- For own-site sales at or under EUR 150: appoint an EU-established intermediary (mandatory for Indian sellers. No mutual-assistance agreement), obtain one IOSS number, and configure checkout to charge the destination member state's VAT rate.
- Wire the IOSS number into every carrier's electronic pre-arrival data; never print it on labels.
- Reprice for the EUR 3/item flat duty (per tariff subheading, payable by declarant) effective since 1 July 2026. Update landed-cost sheets per SKU-combination, not per parcel.
- Prepare product identifiers (PIDs) in declaration data before 1 November 2026.
- File monthly IOSS returns via the intermediary; keep records 10 years.
- For above-EUR-150 SKUs decide DAP vs DDP deliberately and document the importer-of-record consequence.
- Diarise 1 July 2028 (flat fee lapses) and monitor the customs reform package before assuming any post-2028 rule.
- Remember the parallel non-VAT obligations. The GPSR Responsible Person, CE marking and packaging EPR are separate workstreams: see the GPSR Responsible Person guide , CE marking guide , packaging EPR guide and, for the India-side certification angle, BIS certification for exports .
Meera Handlooms sells cotton cushion covers (EUR 45 a set) and brass table lamps (EUR 85) to EU consumers through its own Shopify store and through Amazon.de, shipping every order individually from Jaipur by courier. In the week of 10 August 2026 it receives: (A) a Shopify order from Munich for one cushion-cover set; (B) a Shopify order from Lyon for one cushion-cover set plus one brass lamp (EUR 130 total); (C) an Amazon.de order for one lamp; and (D) a Shopify order from Amsterdam for a EUR 220 hand-knotted rug. </> } result= >
| Order | Value / channel | VAT treatment | Customs duty |
|---|---|---|---|
| A. Munich | EUR 45, own site (Shopify) | Under EUR 150, so IOSS applies: German VAT 19% (EUR 8.55) charged at checkout, reported by the EU intermediary in the monthly IOSS return under Meera's IOSS number | One subheading, one item line: EUR 3 under Reg (EU) 2026/382, payable by Meera as declarant. Priced into the product, not billed to the buyer |
| B. Lyon | EUR 130 (cushion set + brass lamp), own site | Still under EUR 150 as a consignment: French VAT 20% (EUR 26) via IOSS | Two tariff subheadings (textiles + brass lamp): EUR 6, per the Commission's per-item guidance |
| C. Amazon.de | EUR 85 lamp, marketplace | Amazon is the deemed supplier under art 14a(1): it collects the German VAT under its own IOSS number, which Meera transmits in the courier's customs data. Meera charges no VAT; her own IOSS number stays out of it | EUR 3 (one subheading), IOSS-declared consignment |
| D. Amsterdam | EUR 220 rug, own site | Above the EUR 150 ceiling, so IOSS is unavailable: normal import declaration with Dutch import VAT (21%) collected at the border. Meera ships DAP, so the buyer pays the carrier before delivery | Any applicable normal tariff duty at the border. Not the flat fee |
Meera also flags its ERP: product identifiers become mandatory in low-value declarations from 1 November 2026, and the EUR 3 flat fee lapses on 1 July 2028.
Frequently asked questions
Can an Indian seller register for IOSS directly, without an intermediary?
No. A seller established outside the EU can only use the IOSS import scheme through an EU-established intermediary, unless its country has a VAT mutual-assistance agreement with the EU. India has no such agreement, so an Indian seller must appoint an intermediary. The intermediary registers the seller in one member state, files the monthly IOSS returns, and is jointly liable for the VAT. Which is why intermediaries charge fees and usually require a security deposit or direct debit of the VAT.
Is the new EUR 3 customs charge per parcel or per item. And who actually pays it?
Per item, meaning per tariff subheading line in the declaration, not per parcel. The Commission's own example: one T-shirt plus one watch in a single parcel is two subheadings, so EUR 6. It applies from 1 July 2026 until 1 July 2028 under Council Regulation (EU) 2026/382 to goods declared under the IOSS scheme or sent in postal consignments. It is payable by the declarant (the seller, IOSS holder, special-arrangements user or their indirect representative) and is not collected from the consumer at the door, so it must be priced into the product.
If I only sell on Amazon or Etsy, do I need my own IOSS number at all?
Usually not. Under article 14a(1) of the VAT Directive, a marketplace facilitating distance sales of imported goods in consignments not exceeding EUR 150 is the deemed supplier: it accounts for the VAT under its own IOSS number, which you transmit in the carrier's customs data. A marketplace-only Indian seller therefore often needs no IOSS registration. The moment you open an own-website channel (Shopify or similar), you need your own IOSS via an EU intermediary for that channel. And you must never reuse the marketplace's IOSS number for own-site orders.
Did the EU abolish the EUR 150 threshold? Which EUR 150 rule changed and which one still stands?
There were two different EUR 150 rules, and only one changed. The EUR 150 customs-duty relief was abolished on 1 July 2026 by Council Regulation (EU) 2026/382, which replaced it with a temporary flat duty of EUR 3 per item until 1 July 2028. The EUR 150 IOSS VAT ceiling is still in force as of August 2026. The proposal to remove it and extend IOSS to all values is part of the EU customs reform package still in negotiation and is not law. The article 14a marketplace deemed-supplier boundary also remains at EUR 150.
What happens to my parcel if I ship to an EU consumer without using IOSS?
The parcel still owes EU VAT. There has been no VAT-free floor since the EUR 22 exemption was abolished on 1 July 2021. For consignments at or under EUR 150, the special arrangements of articles 369y. 369zb of the VAT Directive apply: the postal operator or courier collects the import VAT from your customer on delivery, usually with a handling fee, which causes refused parcels. Postal consignments also attract the EUR 3 per-item flat duty. A non-postal courier consignment without IOSS falls to a standard customs declaration with normal Common Customs Tariff duties. Above EUR 150, IOSS was never available and normal import rules apply in any case.
Sources & citations
- [Council Regulation (EU) 2026/382 (Official Journal)](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202600382).
- [European Commission. Guidance and legal text on the temporary flat fee for low-value imports (8 June 2026)](https://taxation-customs.ec.europa.eu/news/guidance-and-legal-text-temporary-flat-fee-low-value-imports-which-will-apply-until-1-july-2028-2026-06-08_en).
- [European Commission. VAT One Stop Shop portal](https://vat-one-stop-shop.ec.europa.eu/index_en).
- [European Commission. Register to OSS (intermediary requirement)](https://vat-one-stop-shop.ec.europa.eu/one-stop-shop/register-oss_en).
- [European Commission. Online electronic interfaces (deemed supplier)](https://taxation-customs.ec.europa.eu/online-electronic-interfaces_en).
- [Council Directive 2006/112/EC (VAT Directive)](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32006L0112).
- [Directive (EU) 2017/2455 (e-commerce VAT package)](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32017L2455).
Update history
- First published.