IOSS and OSS — VAT accounting in UK↔EU e-commerce

What is IOSS and who does it affect

IOSS (Import One Stop Shop) is a simplified scheme for declaring and paying VAT on distance sales (e-commerce) of goods imported from third countries — that is, from outside the European Union — to consumers in the EU. After Brexit, the United Kingdom lost its member-state status and became a "third country" in terms of EU tax law. This means that if you are a UK-registered seller dispatching goods to customers in the EU, your sales fall within the IOSS framework — provided the value of each consignment remains below the €150 threshold.

The fundamental difference between IOSS and the old systems is that VAT is collected at source — in the UK, at the point of sale — and the former €22 low-value exemption no longer applies. From 1 July 2021, every e-commerce consignment, regardless of value, is subject to VAT. IOSS automatically handles this obligation for consignments up to €150, with no need for customs clearance at the EU border.

The €150 / £135 threshold — what changes above it

The intrinsic value threshold of €150 is the key factor in determining whether a consignment will be handled under IOSS or under standard import procedures. It is worth understanding what this means in practice.

Consignments up to €150 — IOSS

If the value of goods in a consignment does not exceed €150 (approximately £135), a seller (or their intermediary) registered for IOSS collects VAT from the customer at checkout and remits it via a monthly VAT return covering all EU member states. At the point of import, the consignment is not held at the border — it is sufficient for the IOSS number to appear in the customs declaration.

Consignments above €150 — standard import

Goods with an intrinsic value above €150 are subject to standard import procedures. The customs authority collects any applicable duty and VAT at the border or upon delivery. This entails delays, additional logistics costs, and the recipient having to pay the tax before receiving the parcel.

Excise goods — excluded without exception

Excise goods — alcohol and tobacco — are entirely excluded from the IOSS scheme regardless of value. If you wish to sell these categories to the EU, they cannot use the simplified route. Standard, more restrictive import procedures apply to them.

IOSS via HMRC versus via an EU intermediary

A UK seller has two main routes to registering under IOSS. Both achieve the same goal — collecting VAT at source — but they differ in terms of responsibility and administrative requirements.

Option 1 — direct registration through HMRC (UK IOSS)

If you are VAT-registered with HMRC and meet the qualifying conditions, you can apply for an IOSS number directly in the UK. In this case, you (as the seller or your company) are personally responsible for the monthly declaration, calculating the correct VAT rate for each EU member state, and remitting the amounts to the relevant tax authorities. This is the most straightforward approach administratively for medium and larger sellers who have the resources to manage these obligations.

Option 2 — registration through an EU intermediary

Alternatively, you can entrust IOSS registration to an intermediary established in the European Union. The intermediary takes on the VAT declaration obligations, tax calculation, and remittance to European authorities. They are jointly and severally liable to the tax authorities — if the VAT is not remitted, the authority can pursue you as the seller. This model is popular among smaller sellers who wish to avoid the administrative burden of managing four tax systems simultaneously.

From April 2026 — intermediary-only registration

From 1 April 2026, European rules allow an intermediary to register solely through HMRC, without any direct registration by the seller. This changes the dynamic — small businesses can now delegate their entire IOSS administration to a single EU partner without having to register with HMRC themselves.

IOSS vs OSS — the differences and what each one covers

The abbreviations can be confusing. IOSS and OSS sound similar, but they are different systems — though one is part of the other.

OSS — the broader platform with three schemes

OSS (One Stop Shop) is the umbrella name for the EU system, which encompasses three separate schemes:

• Union scheme — for B2C sales between businesses registered within the EU (intra-EU goods sales). The threshold is €10,000 per year.
• Non-Union scheme — for services supplied by businesses outside the EU to consumers in the EU.
• Import scheme (IOSS) — for the importation of goods from third countries via e-commerce.

IOSS — the scheme exclusively for imports from third countries

IOSS is precisely the third element above. It covers the sale of goods imported from third countries (UK, USA, China, etc.) to consumers in the EU. It is a simplified process — one number, one VAT return, instead of separate registrations in each country.

A critical warning for UK sellers

After Brexit, many British businesses mistakenly believe they can use the Union OSS for sales to the EU. This is incorrect. The Union OSS is reserved for intra-EU sales between member states. A seller based in Great Britain dispatching goods to the EU can never use the Union OSS. Their only option (for consignments ≤€150) is IOSS (the Import scheme). The Union OSS is only relevant for sales from Northern Ireland to other EU countries under specific post-Brexit arrangements — but that is a separate topic.

What happens without IOSS — delays and unexpected costs for the customer

If you do not register for IOSS, every consignment from the UK to the EU will be treated as a standard import. VAT is collected by customs or the carrier from the recipient at the point of delivery. In practice this means:

• The delivery is held — customs may detain the consignment while they check it and calculate the VAT due.
• The customer faces an additional charge — they must pay the VAT plus a carrier handling fee (typically £10–£20).
• An unpleasant surprise — the customer was unaware of the additional cost at the time of ordering and now has to pay it or refuse delivery.
• More refused deliveries — some customers are unwilling or unable to pay the extra tax, so the parcel is returned.

IOSS resolves all of these issues: the customer pays a final, all-inclusive price at checkout, the delivery is not held, and the consignment crosses the border smoothly.

UK VAT registration — a prerequisite for IOSS

To register for IOSS — whether directly through HMRC or via an intermediary — you must be VAT-registered in the United Kingdom. If you sell from the UK but do not yet have a VAT number, you will need to obtain one before you can think about IOSS. HMRC requires taxable turnover to exceed the registration threshold, but many businesses register voluntarily before reaching it so that they are prepared. This is a separate process, but an essential one.

Key takeaways — summary

IOSS is a simplified scheme for e-commerce that allows UK sellers to collect VAT at source on consignments up to €150 sent to consumers in the EU. Registration is possible directly through HMRC or via an EU intermediary — each route has its advantages and drawbacks. OSS is the broader platform of which IOSS is the import scheme; the Union OSS does not apply to GB sales. Without IOSS, every consignment faces delays and VAT charges collected upon delivery, which deters customers. Excise goods are excluded. The €150 threshold is the dividing line — above it, standard import procedures apply with duty and taxes levied at the border. Any business selling e-commerce to the EU should make IOSS a priority in its logistics and tax strategy.

FAQ — frequently asked questions

What is the difference between IOSS and OSS?

IOSS (Import One Stop Shop) is a simplified scheme for the distance sale of goods imported from third countries (outside the EU) to consumers in the EU, for consignments with an intrinsic value not exceeding €150. OSS (One Stop Shop) is the broader platform covering three schemes: the Union scheme (intra-EU B2C sales above the threshold), the Non-Union scheme (services supplied from third countries), and the Import scheme (i.e. IOSS itself). For a seller based in Great Britain dispatching goods to the EU, the relevant option is IOSS or standard import — the Union OSS does not apply to GB→EU trade.

Up to what consignment value does IOSS apply?

IOSS covers consignments with an intrinsic value not exceeding €150, which is approximately £135. Above this threshold, goods are subject to standard import procedures with customs duty and VAT charged at the border. Excise goods (alcohol and tobacco) are entirely excluded from IOSS regardless of value.

Does a UK seller need an intermediary in the EU?

A UK seller registered for VAT with HMRC can register directly under the IOSS scheme through HMRC (UK IOSS). Alternatively, they may appoint an intermediary established in the EU, who then becomes jointly and severally liable for the VAT payment. From 1 April 2026, registration of the intermediary alone through HMRC is also possible. The choice depends on sales volume and administrative capacity.

What happens if I do not use IOSS?

Without IOSS, VAT is collected by customs or the carrier from the recipient at the point of delivery. This involves additional carrier handling fees, potential delays, and the risk of the customer refusing delivery. This approach creates far more friction in the end-customer experience than an IOSS arrangement where VAT is already factored into the price at checkout.

Does the OSS Union scheme apply to sales from the UK to the EU?

No. The OSS Union scheme applies to intra-EU sales between EU member states — after Brexit, Great Britain no longer belongs to this scheme. A UK seller dispatching goods to the EU uses IOSS (up to €150) or standard import procedures (above that threshold). The Union OSS is only relevant for sales from Northern Ireland to other EU countries under specific Brexit arrangements.

Official sources

• Check if you can register for the VAT Import One Stop Shop scheme — GOV.UK
• Register for the VAT Import One Stop Shop scheme — GOV.UK
• Using an intermediary to register and act on your behalf for the VAT Import One Stop Shop scheme — GOV.UK
• One Stop Shop portal — European Commission