29 Oct 2025
If you sell online to customers in Europe, you may have heard about IOSS - but what exactly does it mean, and why should you care? Don’t worry, this beginner’s guide breaks it down in simple terms, explaining what IOSS is, how it works and how to get started.
What is IOSS?
IOSS stands for Import One-Stop Shop. It’s a system introduced by the European Union to simplify the process of collecting and paying Value Added Tax (VAT) on goods sold to customers in EU countries.
Before IOSS, low-value goods (under €22) could be shipped into the EU without VAT. However, this rule changed in 2021 — now, all goods sold to EU customers are subject to VAT, regardless of value.
The IOSS scheme was designed to make this process easier for sellers. Rather than registering for VAT in every EU country where you sell, IOSS allows you to register in just one EU country and handle all your VAT obligations through that single registration.
How Does IOSS Work?
Here’s a quick summary of how the IOSS system simplifies your EU sales:
You register once with an EU tax authority and receive an IOSS number.
You collect VAT at checkout based on the customer’s location.
You file a single VAT return (usually monthly or quarterly) in the country where you registered.
You pay the collected VAT to that country’s tax authority, which then distributes it to the relevant EU member states.
Why Should Online Sellers Care About IOSS?
For e-commerce businesses, IOSS isn’t just about compliance - it’s about making your cross-border operations smoother and more efficient. Here’s how it helps:
1. Simplified VAT Collection
Forget dealing with multiple tax systems. With IOSS, you handle all your EU VAT obligations through a single registration.
2. Transparent Pricing for Customers
VAT is collected at checkout, so shoppers see the full price upfront, including taxes. No unexpected customs fees or delays - just a smoother buying experience.
3. Faster Customs Clearance
Because VAT is already paid, parcels move through EU customs more quickly, meaning faster delivery times and happier customers.
4. Reduced Administrative Work
With one registration and one VAT return, IOSS drastically reduces paperwork, saving you time and helping your team stay focused on growth.
How to Get Started with IOSS
Getting started with IOSS is straightforward. Here’s what you need to do:
1. Check If You’re Eligible
IOSS applies to businesses selling goods from outside the EU to EU customers, with an item value of €150 or less (excluding shipping). If your products exceed this value, IOSS won’t apply.
2. Register for IOSS
You’ll need to register with an EU tax authority. Once approved, you’ll receive an IOSS number, which you’ll use on all relevant shipments.
3. Collect VAT at Checkout
When customers order, collect VAT based on their delivery country. Most major e-commerce platforms (like Shopify, WooCommerce, and Amazon) can automatically calculate the correct VAT rate for each transaction.
4. File VAT Returns
You’ll need to submit regular VAT returns (typically monthly or quarterly) to the EU tax authority where you registered, detailing how much VAT you’ve collected and paid.
Final Thoughts
IOSS has transformed how non-EU businesses sell to European customers. By simplifying VAT collection and customs processes, it removes many of the barriers that used to make cross-border trade complicated.
With IOSS, you can:
✅ Collect VAT easily at checkout
✅ Speed up delivery times
✅ Provide a better customer experience
✅ Reduce your admin workload
If you’re planning to expand your e-commerce business into the EU, registering for IOSS is a smart first step towards making your international sales smoother, faster and more compliant.
Published by Hutch Logistics
Helping growing Ecommerce brands deliver world-class fulfilment experiences.
