The European Union has reached a pivotal agreement on updating its VAT framework, particularly concerning e-commerce imports and the taxation of distance sales involving goods from non-EU countries.
This revised approach is set to improve the efficiency of the Import One-Stop Shop (IOSS) system. By simplifying the VAT declaration and payment process, the changes aim to reduce red tape for importers within the EU and strengthen measures against VAT evasion.
A key element of the reform is to encourage broader adoption of IOSS, especially for low-value goods (under €150) sold online to EU consumers. More sellers will now be accountable for charging and remitting import VAT, making IOSS an increasingly attractive option for cross-border e-commerce operations.
Although registering with IOSS remains optional, businesses that opt out may face complex and costly VAT registration requirements across multiple EU countries. To address cases of non-compliance, a backup mechanism allows the customer to pay the VAT directly in order to receive their goods, ensuring continuity in delivery.
The directive is seen as part of a broader effort to modernize EU customs processes and create a more cohesive and efficient trading environment. By reinforcing IOSS use, the EU aims to streamline parcel processing and guarantee consistent VAT collection on online purchases.
In 2024 alone, the EU received around 4.6 billion parcels from outside its borders — about 12 million per day. Meanwhile, VAT collected through IOSS exceeded €26.3 billion in 2023, representing a 35% increase compared to the previous year.