EU VAT for international sellers: OSS, IOSS and marketplace rules

For an international seller, the useful VAT question is which transaction belongs in which return. Seller location alone cannot answer it. A digital service, a parcel dispatched from an EU warehouse and a parcel imported from outside the EU can follow different paths even when the same customer pays through the same checkout.

This guide covers the EU framework as of October 2026. Establish the seller’s VAT role, buyer status, supply type and actual movement of goods before configuring collection. UK VAT and territories outside the EU VAT area require separate treatment.

Capture the facts that change the VAT route#

Record warehouse location separately from the seller’s registered address. A non-EU seller shipping goods already stored in France to Germany is making an intra-EU movement, not importing that parcel from outside the EU. A VAT registration number also does not by itself prove a fixed establishment.

Keep B2B transactions outside the consumer scheme shortcuts#

For qualifying intra-EU goods supplied to a business, VAT-number validity and actual cross-border transport matter to the treatment. For many B2B services, the customer accounts for VAT through reverse charge. Exceptions depend on the supply: a business label or VAT number alone is not a complete tax determination.

Retain the VAT-number check, buyer identity, relevant transport or service evidence and the reason for the treatment. If VIES returns an invalid result, check the details with the customer and obtain appropriate registration evidence or authority confirmation. Do not quietly convert the record into a valid number, or assume every failed lookup has the same legal consequence.

For B2C services, distinguish telecommunications, broadcasting and electronic services (TBE) from other services. Many ordinary consumer services use the supplier-location rule, while TBE uses customer location subject to the narrow threshold exception below. Other service-specific place-of-supply rules still need their own classification.

Apply the €10,000 threshold only to eligible flows#

The exception requires a supplier established or resident in only one Member State. It combines qualifying cross-border B2C TBE services and intra-EU distance sales dispatched from that Member State. Their combined value, excluding VAT, must not exceed €10,000 in both the current and preceding calendar year. Imports and other services do not use this threshold.

An eligible supplier can retain supplier-country treatment below the threshold or elect destination treatment, with that election binding for two calendar years. Once the threshold is exceeded, destination treatment applies. This is a place-of-supply exception, not a general exemption from VAT registration or a €10,000 allowance for non-EU sellers.

Consider an invented seller established only in Portugal, with qualifying goods dispatched from Portugal. Last year’s combined qualifying sales were €8,000; this year’s goods total €6,000 and TBE services total €3,500. The combined €9,500 remains below the limit. A further €700 qualifying sale takes the total to €10,200: destination treatment applies from the transaction that crosses the limit, rather than waiting until year-end. If last year’s total had already exceeded €10,000, the exception would not be available this year.

Choose the scheme that covers the actual supply#

A non-EU seller can use Union OSS for eligible intra-EU goods sales. Its lack of EU establishment does not force those goods into non-Union OSS. A business can use more than one scheme when it has different qualifying flows; keep each registration and transaction population distinct.

OSS is optional. Once a scheme is chosen, use it consistently for all supplies within that scheme, rather than selecting only convenient destination countries. Domestic returns and other local obligations continue where applicable. OSS also does not solve every registration need arising from stock movements or local activity.

Confirm the correct Member State of identification and effective start date before routing transactions into a scheme. Non-EU IOSS suppliers generally need an EU intermediary, with a specific mutual-assistance exception. Verify eligibility for that exception rather than inferring it from nationality or a foreign VAT number.

Separate IOSS VAT from customs charges#

With IOSS, VAT is collected on the eligible sale and declared through the import scheme; the valid IOSS number supports exemption from import VAT. Protect that number and transmit it through the authorized customs chain. Without a valid applicable IOSS route, import VAT handling is different and the customer may face collection on import.

The €150 IOSS limit is not a promise that customs duty is zero. Since 1 July 2026, the former low-value customs-duty relief has been abolished. A temporary €3 duty applies per customs item/category, identified by tariff sub-heading, in qualifying IOSS or postal consignments up to €150; it is not a flat €3 per parcel. Postal consignment here is the regulation’s defined low-value distance-sale category, not a restriction to postal operators; check preferential-treatment exclusions. Check applicable ordinary duties for other lanes. Under the Commission’s June 2026 VAT addendum, that duty is excluded from the taxable amount of the IOSS sale; import-VAT routes include the duty in their import VAT base. Treat duty, VAT and carrier charges separately and agree who bears each before advertising a landed price.

For a new import lane, verify intrinsic consignment value, product eligibility, importer arrangements, customs transmission and the customer-facing price together. Do not apply IOSS to a consignment above €150 or to excise goods simply because the checkout system has an IOSS toggle.

Test whether a marketplace becomes the deemed supplier#

The principal goods cases are an electronic interface facilitating imported distance sales in consignments no more than €150, and facilitating goods already within the EU supplied by a seller not established in the EU to a consumer or equivalent non-taxable buyer. The latter covers domestic as well as intra-EU sales, without that €150 value limit.

Determine whether the interface legally facilitates the supply; processing a payment alone does not settle that question. A contract calling the merchant the seller cannot override deemed-supplier treatment. When it applies, map the underlying seller-to-interface supply and interface-to-customer supply separately. Set customer VAT collection and reporting against the correct entity, then keep commercial seller settlement distinct.

For example, a non-EU merchant sells a €400 product already warehoused in Belgium to a Belgian consumer through a qualifying facilitating marketplace. The goods case can make the interface the deemed supplier even though the sale is domestic and exceeds €150. It is not an IOSS import. By contrast, a marketplace is not universally deemed supplier for every ordinary EU-established merchant’s domestic goods sale.

Reconcile sales, adjustments and returns#

Use the tax decision attached to each sale to route its taxable amount and VAT by country and rate. Retain the original sale when issuing a refund or credit and link the adjustment to its reporting history. A processing fee deducted from settlement is not automatically a reduction in the taxable selling price.

In an invented calculation using an applicable 20% rate, a €120 VAT-inclusive price comprises €100 net consideration and €20 VAT. If the processor deducts €3, the €117 deposit still includes the economic effect of the €20 tax liability. Reconcile the sale, fee and cash movement separately instead of calculating VAT from the bank deposit.

Union and non-Union OSS periods are quarterly; IOSS periods are monthly. The return and corresponding payment are due by the end of the following month, and nil periods still require returns. Maintain domestic filing streams alongside them, with a named owner for return references, payment and corrections.

OSS records must be retained for ten years from the end of the transaction year and made electronically available on request. Keep the supply date, country, classification, tax calculation, customer-location evidence and linked payments or adjustments. Invoice obligations differ by route; OSS does not mean every consumer sale requires the same invoice, nor that all local invoice duties disappear.

Before filing, compare the complete transaction population with the return export and ledger. Resolve differences through documented corrections or the appropriate filing procedure, while preserving deadlines. An unexplained difference is a case to own and resolve, not authority to postpone tax indefinitely or withhold amounts already owed to sellers.