IOSS VAT rules are facilitating the massive growth of e-commerce into the European Union. Simplified tax rules are levelling the playing field between postal imports, commercial imports, and domestic EU sellers. These modernized rules actually present a massive opportunity for Canadian and US sellers shipping to Europe and the UK. With over 70 percent of the EU population purchasing online, North American goods remain a highly popular option.
The EU recognizes the need to treat all 27 member countries as a single digital marketplace. To successfully navigate this space, e-commerce merchants must understand how import taxes operate across borders.
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What are European VAT and IOSS?
What is European VAT?
Value-Added Tax (VAT) is a consumption tax levied by all European countries. Each country sets its own rules and rates with some standardization based on overarching EU directives. VAT is applied to the sale of all goods and services, including imported e-commerce goods like electronics and clothing. Ultimately, the end consumer bears the final tax burden.
What is the Import One Stop Shop (IOSS)?
The Import One Stop Shop (IOSS) streamlines the process of declaring and paying VAT for transactions outside the EU. It simplifies the process of importing goods by allowing businesses to complete customs declarations and pay applicable taxes in a single transaction.
When you use IOSS, pricing becomes completely transparent for your customers. They pay all the VAT due at the online checkout, avoiding surprise import fees or delays upon delivery.
2026 Updates: The End of the 150 Euro Threshold
Important Customs Changes for B2C Shipments
- Europe imposes a minimum 3 Euro per shipment charge. This ends the previous duty-free threshold for items under 150 Euros.
- This 3 Euro duty applies to each distinct item category contained within a parcel (based on tariff sub-headings).
Note that IOSS is strictly for business-to-consumer sales; business-to-business shipment import processes remain unchanged.
How to Register for IOSS (Step-by-Step)
If you qualify for IOSS, managing VAT obligations becomes incredibly efficient. Registration for all distance sales of imported goods to EU customers is handled via any single EU Member State.
- Register with an EU Fiscal Representative: Sellers outside the EU must appoint an EU fiscal representative or intermediary to manage the process.
- Obtain an IOSS VAT ID Number: Keep this number secure to monitor and prevent potential fraud.
- Update Your Checkout: Show the VAT rate and total due at your online checkout. This transparency meets consumer protection requirements.
- Collect VAT: The buyer pays the VAT due at the point of sale.
- Include Data for Customs: The required advance data (EAD) for customs must include your IOSS VAT ID number.
- File Monthly Reports: Your EU fiscal representative must submit an electronic VAT return on your behalf along with the payment.
Note: Jet Worldwide facilitates IOSS registration for our Canadian customers using our direct e-commerce shipping options.
EORI Number vs. IOSS
While IOSS applies to shipments sent directly to consumers, you must use an EORI number for business imports.
An Economic Operators Registration and Identification number (EORI number) is a unique EU identification number for businesses that import or export goods into or out of Europe. It is a mandatory part of the data set required for customs entries in all EU countries. Before shipping from Canada to a business in Europe, always verify the consignee's EORI number.
CETA and Duty-Free Exceptions
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is a free trade agreement that removes barriers to trade. Under CETA, goods that qualify as "Canadian origin" can clear duty-free into the EU. However, it is important to note that while duties may be waived, VAT still applies to these imports.
Read More: Certification of Origin Explained
Why Choose Direct Shipping to the EU
Historically, many North American sellers utilized postal clearance because it offered lax customs oversight. Today, new rules mandate strict compliance for both postal and commercial carrier clearance.
Direct Air freight shipping to the EU and UK from North America offers a much faster, more reliable alternative to the postal system. Canadian and American merchants can easily scale their sales into the European Union without needing a physical warehouse abroad.
Disclaimer: The information in Jet Worldwide online content, including this post, is for general information only and is not intended as strict legal or tax advice.
