Customs and Import VAT: What Happens at the Border
Reviewed by Michael Bauer, Cross-Border VAT Consultant · Updated
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Every dropshipper who imports goods from outside the EU must deal with customs. Understanding what happens at the border is essential for avoiding surprises, delays, and angry customers.
The Import VAT Process
When goods arrive from a third country (e.g. China), they pass through customs in the EU. Import VAT is calculated based on the value of the goods + shipping + any duties.
If the seller does not use IOSS, the courier (DHL, FedEx, UPS, CTT, La Poste) will pay the VAT on behalf of the customer and charge them upon delivery, often with an additional handling fee.
Since 1 July 2026 there is customs duty on low-value parcels as well. Council Regulation (EU) 2026/382 abolished the duty relief for consignments up to €150 and put a flat €3 per item in its place, in two cases: where the import is exempt from VAT because IOSS is used, or where the parcel travels as a postal consignment. Ship by courier without IOSS and the ordinary Common Customs Tariff applies instead. We set out the full rules, with the worked examples, here.
Example
- A €90 product shipped from China to Portugal.
- Without IOSS → CTT (Portugal’s postal operator) collects the VAT on delivery and charges its own handling fee for doing so.
Legal Source:
- European Commission – Importing goods
Conclusion
For dropshippers, transparency is key: make sure customers know VAT will be collected at delivery unless IOSS is applied.
Want smoother deliveries and fewer customer complaints? We’ll show you how to manage VAT at import.