Understanding OSS & IOSS in EU E-commerce

Since July 1, 2021, the European Union has introduced new VAT schemes to simplify cross-border e-commerce. The One Stop Shop (OSS) and the Import One Stop Shop (IOSS) are central to these reforms. For dropshippers and online sellers, understanding when and how to use OSS or IOSS is critical for avoiding double taxation and ensuring smooth business operations.

What is OSS?
The OSS scheme allows EU-based sellers to declare and pay VAT for all intra-EU B2C sales in a single EU country, instead of registering in each Member State. This applies when goods are shipped from one EU country to consumers in another EU country.

  • Example: A Dutch business selling goods stored in the Netherlands to customers in France and Germany can report all VAT via the Dutch OSS return.

What is IOSS?
The IOSS scheme applies to goods imported into the EU with a value of up to €150. Instead of charging VAT at the border, sellers (or platforms) can collect VAT at the time of sale and declare it through the IOSS portal.

  • Example: A Spanish dropshipper sending small items directly from China to customers in Portugal can charge Portuguese VAT at checkout using IOSS.

Without IOSS:
If IOSS is not used, the VAT is collected at import by the courier or postal service. This often leads to customer dissatisfaction due to unexpected handling fees.

Legal basis:

Conclusion
OSS and IOSS are powerful tools, but not mandatory. Sellers can choose between charging VAT upfront (IOSS) or leaving it to customs at import. The key is knowing which approach best fits your dropshipping model.

📩 Need help setting up OSS/IOSS? Contact Ecom VAT Experts to ensure your structure is compliant and efficient.

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