Every commercial parcel shipped to an EU consumer is subject to VAT, whatever its value. For parcels up to €150, the EU offers a simplified system called the Import One-Stop Shop (IOSS). It lets you charge VAT at checkout and file one monthly return for all 27 Member States, instead of leaving VAT to be collected from your customer on delivery.
This guide explains how IOSS works, the alternatives, and how to decide whether it is worth registering, now that the €3 duty and €2 handling fee also apply.
The basics: VAT on imports up to €150
According to the Commission’s Explanatory Notes on the VAT e-commerce rules, all commercial goods imported into the EU have been subject to VAT since 1 July 2021. There are three ways that VAT gets collected on consumer parcels with an intrinsic value up to €150:
- IOSS: you (or the marketplace) charge VAT at checkout at the rate of the customer’s country, and the parcel clears customs VAT-exempt.
- Special Arrangements: the carrier or postal operator collects import VAT from the customer on delivery and pays it to the authorities monthly.
- Standard import VAT: VAT is paid on importation through the normal customs procedure, usually charged to the customer by the carrier.
Using IOSS is optional, according to the Commission’s VAT e-commerce guidance. Above €150, IOSS cannot be used and normal import VAT and customs rules apply.
How IOSS works in practice
Scope
- Distance sales of goods sent from outside the EU to EU consumers, in consignments with an intrinsic value of €150 or less.
- Goods subject to EU harmonised excise duties (such as alcohol and tobacco) are excluded. The Explanatory Notes say IOSS also cannot be used where low-value goods are shipped together with excise goods.
- You cannot split one order above €150 into smaller parcels to bring it under IOSS.
Charging VAT
You charge the VAT rate that applies to the product in the Member State where the goods are delivered. VAT becomes chargeable when payment is accepted, meaning when you receive payment confirmation or authorisation, not when the money arrives. Rates vary by country and product, so your checkout needs a rate table for all 27 Member States.
Filing and paying
The Explanatory Notes say IOSS returns are monthly. Both the return and the payment are due by the end of the month following the reporting month. The return breaks sales down by destination country and by standard and reduced rates. According to the OSS portal, you must file a return for every period, even if you made no sales. You must keep records for 10 years from the end of the year of the sale.
The IOSS number
Your IOSS number (format IMxxxyyyyyyz) has to reach customs through your carrier’s electronic data to file directly. In practice, risk analysis at EU level means inconsistent or incorrect data (wrong HS codes, undervaluation, missing PIDs) is more likely to be spotted, wherever your parcels enter the EU.
The EU Customs Data Hub
The Data Hub will be a single digital interface for customs operations across the EU. Businesses will submit customs and product data once, through one platform, instead of dealing with national systems. The Commission says there are currently more than 111 separate national IT interfaces and systems.
The Commission gives this rollout:
- 2028: e-commerce operators gain access. The Commission says use of the Data Hub becomes mandatory for e-commerce on 1 July 2028.
- 2031: other businesses can start using it voluntarily.
- 2034: mandatory for all traders, from 1 March 2034.
Under the new model, online platforms and sellers become “importers for distance sales”. The Commission says they will report sales to EU consumers through the Data Hub immediately after they happen, so customs can assess risk before the goods arrive. They will also be liable for duties and fees, and for product compliance, for example by identifying a responsible economic operator in the EU.
When normal duty rates replace the €3
This is the date most sellers care about. Official sources agree on the plan:
- The Commission says the €3 applies until 1 July 2028, after which normal customs duties apply depending on the type of goods.
- The Council of the EU says the €3 applies from 1 July 2026 to 1 July 2028, “may be extended as appropriate”, and will be replaced by normal tariffs once the Data Hub is operational, “currently expected in 2028”.
- A Council working document says that if the Commission finds the Data Hub will not be ready by that date, it must propose extending the transitional measure.
Bottom line: 1 July 2028 is the legal end date for the flat €3, but it depends on the Data Hub being ready. An extension is possible. We will update our Rule Change Tracker if that happens.
When normal rates apply, low-value parcels will pay the duty for each product’s tariff code, from the first euro. Depending on the product, that could be more or less than €3 per item. The Irish Revenue uses today’s rules for parcels over €150 as an illustration: jeans at 12% and running shoes at 16.9%. For cheap single-category orders, normal rates may cost less than €3. For higher-value items in high-duty categories, they may cost more. Accurate HS classification will matter even more than it does now.
Other dates in 2028
- Customs warehouses for distance sales: the Commission guidance says this new type of warehouse becomes available from 1 July 2028, and goods sold from such warehouses will pay a lower handling fee. The reduced amount has not been published.
- Who files the declaration: the current order of who must lodge e-commerce declarations (IOSS holder first, then the Special Arrangements user, then the importer’s indirect representative) runs until 30 June 2028, according to the same guidance.
- VAT: the Commission’s revised VAT e-commerce Explanatory Notes mention an extension of the Union One-Stop Shop from 1 July 2028. That concerns other supplies of goods, not IOSS itself.
Timeline at a glance
- May 2023: Commission proposes customs reform.
- 11 Feb 2026: Council adopts Regulation (EU) 2026/382, ending the €150 duty exemption.
- 1 Jul 2026: €3 per-item duty starts. PIDs can be provided voluntarily.
- 16 Sep 2026: customs reform Regulation (EU) 2026/2108 adopted.
- 1 Nov 2026: €2 Union handling fee. PIDs mandatory up to €150.
- 2027: EU Customs Authority established in Lille.
- 1 Jul 2028: Data Hub mandatory for e-commerce. €3 duty planned to end, replaced by normal rates. Extension possible.
- 2031: Data Hub open to other businesses on a voluntary basis.
- 1 Mar 2034: Data Hub mandatory for all traders.
Sources
- European Commission, EU Customs Reform: https://taxation-customs.ec.europa.eu/customs/eu-customs-reform_en
- European Commission news, 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, Guidance on the EUR 3 customs duty and Union handling fee: https://taxation-customs.ec.europa.eu/document/download/053e5b4e-f0be-4f20-9a23-3e3b659a6676_en?filename=Customs%20Guidance%20on%20EUR%203%20customs%20duty.pdf
- Council of the EU press release, 11 February 2026: https://www.consilium.europa.eu/en/press/press-releases/2026/02/11/council-gives-final-green-light-to-new-customs-duty-rules-for-small-parcels/
- Council document ST 8820/26: https://data.consilium.europa.eu/doc/document/ST-8820-2026-INIT/en/pdf
- Dutch Customs, Handling fee for e-commerce (legal references): https://www.douane.nl/en/themes/import-and-export/import/e-commerce/handling-fee-for-e-commerce/
- European Commission, VAT e-commerce Explanatory Notes: https://vat-one-stop-shop.ec.europa.eu/document/download/774b31ca-03c6-4fb1-8209-9e447aeeb1e9_en?filename=Explanatory%20Notes_revised_1Jan2027_0.pdf
- Revenue (Ireland), How the fee applies: https://www.revenue.ie/en/customs/individuals/union-handling-fee/how-the-fee-applies.aspx
Last updated: 29 October 2026. This article is general information, not legal or tax advice.