IOSS or DDP: VAT on goods arriving from outside the EU
If you sell to EU consumers goods shipped from outside the Union, VAT is paid on import. Three ways to handle it, and which one suits your store.
In short
If your products travel from outside the EU directly to the customer (dropshipping, a warehouse in China or the United States), VAT is paid on import. With IOSS you charge it on the sale and declare it every month: the customer does not pay VAT on delivery. It works for consignments of up to €150.
Without IOSS, or above €150, VAT and duties are paid at customs: either the customer pays them on receiving the parcel (DAP) or you pay them upfront through the carrier (DDP). Since 1 July 2026, the EU charges a flat duty of €3 for each type of item, according to its tariff heading, on consignments under €150 that used to enter duty-free. With IOSS, if you don't pay it upfront, it is charged to the customer.
IOSS, DDP or the customer pays
| IOSS | DDP (you pay at customs) | DAP (the customer pays) | |
|---|---|---|---|
| Consignments | Up to €150 | Any value | Any value |
| Who pays the VAT | You, in the monthly return | You, through the carrier | The customer, on delivery |
| What the customer sees | The price including VAT; the €3 duty only if you don't pay it upfront | The final price, no surprises | A charge from the carrier at the door |
| What you file | Monthly Form 369 (or another country's IOSS) | If you import in your own name, a VAT number in the country of import: you deduct the import VAT there and charge the local VAT | Nothing in the EU for that sale |
| What you need | IOSS registration; an intermediary if your business is outside the EU | EORI, an agreement with the carrier and, if you import in your own name, a VAT number in the country of import | Nothing, but returns and complaints go up |
Worth knowing
- If you sell on a marketplace, for consignments of up to €150 to consumers the marketplace itself charges the VAT: those sales don't need your IOSS.
- The €150 limit is per consignment and excludes transport if it is invoiced separately; if you split an order into several consignments to stay under it, customs may treat them as one.
- Products subject to excise duties (alcoholic drinks and tobacco) do not go through IOSS.
- Above €150, no IOSS: import VAT and normal duties, with the importer's EORI.
Frequently asked questions
Is IOSS compulsory?
No. It is optional, but without it the VAT is charged to the customer at customs, and they also pay the carrier's handling fee. For a store selling to EU consumers from outside the EU, it is almost always worth it.
What happens with consignments over €150?
They cannot go through IOSS: import VAT and duties are paid at customs. Either you pay them upfront (DDP) or the customer pays them on delivery (DAP).
How does the €3 duty affect small consignments?
Since 1 July 2026, the EU charges a flat duty of €3 for each type of item, according to its tariff heading, on consignments under €150 that used to enter duty-free. It is a temporary measure, planned until July 2028. IOSS only covers VAT: you pay the duty upfront through the carrier or it is charged to the customer.
Tell us about your store
Book a 15-minute call or write to us. We'll tell you what you need: VAT registration in whichever country, OSS and IOSS, EPR, US sales tax or your store's accounting. No obligation.