Do You Need a VAT Number to Dropship to the EU? A Decision Guide

"Do I need a VAT number to sell to European customers?" It is the question we hear most from dropshippers, and the honest answer is: it depends on your setup. Not on the country where your company is registered, but on where your goods are, how much a parcel is worth, who imports it and where you sell.

Below are six common setups, and what each one requires. Find the one closest to yours.

First, three questions

1. Where do your goods ship from? From outside the EU (for example China or the US), or from a warehouse inside the EU?
2. What is the value per parcel? Up to €150, or more?
3. How do you sell? Through your own store, or through a marketplace such as Amazon?

Setup 1: Shipped from outside the EU, parcels up to €150, VAT charged at checkout

You need an IOSS registration. You charge the customer's local VAT at checkout, report it in one monthly IOSS return, and the parcel clears customs without further VAT. If your company is established outside the EU, you usually need an EU intermediary. See IOSS registration without an EU company.

Setup 2: Shipped from outside the EU, customer is the importer

In principle, no EU VAT registration is needed for these sales. The sale takes place outside the EU, and the customer pays import VAT on delivery. This only works if everything is consistent: no VAT charged at checkout, clear terms of sale, correct invoices and customs data that name the customer as importer. If you or your carrier act as importer instead, the answer changes. See DDP vs DAP for EU dropshipping.

Setup 3: Shipped from outside the EU, parcels above €150

IOSS is not available. You have two options. Either the customer imports (as in setup 2), or you import, which normally requires a VAT registration in the country of import. Many sellers of higher-value goods underestimate this.

Setup 4: Stock in an EU warehouse

You need a VAT registration in the country where the stock is held. Sales to consumers in other EU countries are distance sales, taxed in the customer's country and reported through the Union OSS. The €10,000 EU-wide threshold only helps sellers established in a single EU member state; for non-EU sellers, OSS generally applies from the first sale.

Setup 5: Selling through a marketplace

The marketplace may handle the VAT for you. For imported consignments up to €150, and for sales by non-EU sellers from EU stock, the marketplace is usually treated as the supplier for VAT purposes and collects the VAT itself. You may still need registrations for other parts of your business, such as stock held in the EU.

Setup 6: EU-based company with an EU supplier

You already have a VAT number in your own country. Sales to consumers in other EU countries fall under the distance-selling rules. Below €10,000 in total cross-border sales per year, you can apply your home country's VAT; above it, you charge the customer's local VAT and report it through OSS.

What your company's location does not change

A common misconception is that a company in Hong Kong, the UK or a US state without sales tax can sell to EU consumers without dealing with EU VAT. It cannot. EU VAT follows the goods and the customer, not the seller's registration. With payment data reported to tax authorities through CESOP, and EU member states helping each other recover tax debts, "nobody will notice" is not a strategy.

Frequently asked questions

Can I use more than one setup at the same time?

Yes, and many growing stores do, for example IOSS for small orders and an EU warehouse for bestsellers. Each flow then needs its own correct treatment.

I have been selling without any registration. What now?

First, establish which setup applies to your past sales. In some cases nothing was due; in others, a correction or voluntary disclosure is the safest route. See VAT disputes and recovery.

Is the €150 limit per order or per parcel?

Per consignment, based on the intrinsic value of the goods, excluding transport and insurance unless they are included in the price and not separately shown. Deliberately splitting orders to stay under the limit is not allowed.

Still unsure which setup you have?

Most stores fit one of these six setups, but the details matter: who is named as importer, what your checkout charges, where your stock is. Our free VAT assessment tells you which registrations you need, and which you do not.