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 charged to the customer at the point of sale, at the rate of the EU country of destination, and declared through the IOSS return — 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. For consignments up to €150 IOSS handles this obligation: the import itself is exempt from VAT, so no VAT is collected at the EU border, but the consignment is still declared to customs with the IOSS number. Since 1 July 2026 consignments up to €150 are no longer exempt from EU customs duty: on a transitional basis (until 1 July 2028) a fixed duty of €3 per item — that is, per category of goods — applies to consignments up to €150 under IOSS and to postal consignments (Council Regulation (EU) 2026/382, Article 2).

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 (the EU threshold; the UK's £135 threshold applies to imports into the UK), 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, no VAT is collected — the IOSS number must appear in the customs declaration. Since 1 July 2026 consignments up to €150 are no longer exempt from EU customs duty: on a transitional basis (until 1 July 2028) a fixed duty of €3 per item — that is, per category of goods — applies to consignments up to €150 under IOSS and to postal consignments (Council Regulation (EU) 2026/382, Article 2).

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 for a Great Britain seller — an EU intermediary is required

Per GOV.UK guidance, a business established in Great Britain cannot register directly with HMRC for IOSS. Direct HMRC (UK IOSS) registration is only available to businesses established in Northern Ireland (and, separately, Norway). A GB-established seller must appoint an intermediary (in an EU country or in Northern Ireland) to register and act on their behalf.

The route for GB sellers — registration through an EU intermediary

UK VAT registration is not a condition: you give the intermediary your UK VAT number if you are registered and, if not, your Unique Taxpayer Reference (UTR) or National Insurance number. You entrust IOSS registration to an intermediary — established in an EU member state or, registered with HMRC, in Northern Ireland. The intermediary takes on the VAT declaration obligations, tax calculation, and remittance to European authorities, and is jointly and severally liable to the tax authorities — if the VAT is not remitted, the authority can pursue you as the seller too. Confirm the current process with GOV.UK or your intermediary before relying on this article, as intermediary-registration rules are due to change (see below).

From 1 April 2026 — intermediary registration also becomes available through HMRC

GOV.UK guidance (updated 1 April 2026) explains that an IOSS intermediary can register with HMRC if it is registered for UK VAT and has a business address in Northern Ireland. This concerns registering the intermediary, not direct self-registration by a GB seller — GB sellers still act through an intermediary in an EU country or in Northern Ireland rather than applying for an IOSS number 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 of goods dispatched from one EU member state to consumers in another (intra-EU distance sales of goods). 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 parcels dispatched from GB to the EU. This is incorrect. The Union OSS covers sales of goods dispatched from the territory of an EU member state — a business established outside the EU can use it only for goods dispatched from an EU country (e.g. from a warehouse in the EU), not for parcels sent from GB. For consignments ≤€150 sent from GB to EU consumers, the simplification is IOSS (the Import scheme); the alternative is standard import. The Union OSS also applies to 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 reduces these issues: the customer pays EU VAT in the price at checkout, and no VAT is collected at the border. The consignment is still declared to customs with the IOSS number and, since 1 July 2026, is subject to customs duty (on a transitional basis €3 per item).

UK VAT registration — is it a prerequisite for IOSS?

No. According to GOV.UK guidance, a UK business gives its intermediary its UK VAT number if it is registered and, if not, its Unique Taxpayer Reference (UTR) or National Insurance number. UK VAT registration may be needed for other reasons (e.g. sales in the UK), but it is not a condition for using IOSS.

Key takeaways — summary

IOSS is a simplified scheme for e-commerce that allows UK sellers to charge EU VAT at the point of sale on consignments up to €150 sent to consumers in the EU. A GB seller registers through an intermediary (in an EU country or in Northern Ireland); direct registration with HMRC is only for businesses in Northern Ireland or Norway. 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 IOSS dividing line — above it, standard import procedures apply with duty and taxes levied at the border. Below it, since 1 July 2026 customs duty is also due (on a transitional basis €3 per item for IOSS and postal consignments). 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 cover parcels dispatched from GB (a non-EU business can use it only for goods dispatched from an EU country).

Up to what consignment value does IOSS apply?

IOSS covers consignments with an intrinsic value not exceeding €150. Above this threshold, goods are subject to standard import procedures with customs duty and VAT charged at the border. Since 1 July 2026 customs duty also applies to consignments up to €150 — on a transitional basis €3 per item (category of goods) for IOSS and postal consignments (Council Regulation (EU) 2026/382). Excise goods (alcohol and tobacco) are entirely excluded from IOSS regardless of value.

Does a UK seller need an intermediary in the EU?

A Great Britain-established seller cannot register directly with HMRC for IOSS — direct HMRC (UK IOSS) registration is reserved for Northern Ireland-established businesses. A GB seller must appoint an intermediary in an EU country or, registered with HMRC, in Northern Ireland; the intermediary reports and pays the VAT on the seller's behalf. UK VAT registration is not a condition — without it you provide your UTR or National Insurance number. HMRC registers intermediaries that have a business address in Northern Ireland. Confirm current conditions on GOV.UK before registering.

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?

Not for parcels dispatched from GB. The OSS Union scheme covers sales of goods dispatched from the territory of an EU member state; a business established outside the EU (including in the UK) can use it only for goods dispatched from an EU country. Parcels from GB to EU consumers are accounted for through IOSS (up to €150) or standard import procedures (above that threshold). The Union OSS also applies to 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