OSS vs IOSS Explained: Which EU VAT Scheme Do You Need?

Why the EU Created OSS and IOSS

Before July 2021, a business selling to consumers in multiple EU countries faced a compliance nightmare: potentially registering for VAT in every country where it had customers, filing separate returns in each jurisdiction, and dealing with 27 different tax authorities. For a small SaaS founder or an Etsy seller, that was simply not practical.

The EU introduced two simplified schemes as part of its e-commerce VAT reform package:

• OSS (One Stop Shop) — for services, digital products, and goods already within the EU that are sold B2C across borders
• IOSS (Import One Stop Shop) — for physical goods shipped from outside the EU into EU member states, valued at EUR 150 or less per consignment

Both schemes follow the same core principle: register once, file in one place, and your home tax authority handles the distribution to other member states. But the similarities mostly end there.

What Is OSS (One Stop Shop)?

The One Stop Shop lets businesses report and pay VAT on cross-border B2C (business-to-consumer) sales in a single quarterly return filed in their home country. It replaced the old Mini One Stop Shop (MOSS), which only covered digital services, and expanded coverage to include a wider range of sales.

There are two OSS variants, depending on where your business is based:

Union OSS (for EU-based businesses)

If your business is established in an EU member state, the Union OSS covers:

• Digital services sold B2C — SaaS subscriptions, e-books, online courses, downloadable templates, software, streaming services
• Telecoms and broadcasting services to EU consumers
• Intra-EU distance sales of goods — physical products you ship from your EU warehouse directly to consumers in other EU countries (e.g., you are in Germany and ship orders to French, Dutch, and Italian customers)

Non-Union OSS (for non-EU businesses)

If your business is established outside the EU but you sell digital services to EU consumers, the Non-Union OSS applies. You register in any EU member state of your choosing, and that country becomes your OSS registration country. You file one quarterly return covering all EU sales.

Note that the Non-Union OSS only covers services, not goods. If a non-EU business ships physical goods into the EU, the IOSS or standard import VAT rules apply instead.

Use our free OSS/IOSS Calculator to check whether your cross-border sales exceed the registration threshold.

What Is IOSS (Import One Stop Shop)?

The Import One Stop Shop is a completely separate scheme designed for one specific scenario: goods that are stored outside the EU and shipped directly into EU member states, provided the consignment value is EUR 150 or less.

Before IOSS existed, when a parcel arrived from outside the EU, the buyer would often receive a customs notice and have to pay import VAT (plus sometimes a customs handling fee) before the parcel could be delivered. IOSS eliminates this friction by shifting VAT collection to the point of sale:

• The seller collects VAT at checkout, applying the VAT rate of the buyer’s country.
• The seller reports and remits that VAT monthly through their IOSS registration.
• The parcel clears customs without additional VAT charges — the buyer has already paid.

IOSS is voluntary but strongly recommended. Without IOSS, import VAT is collected at the border by customs or postal operators, which often results in unexpected charges for buyers and delivery delays. Poor delivery experience translates directly into refund requests and negative reviews.

Key IOSS rules:

• Only for consignments of EUR 150 or less in intrinsic value (the value of the goods themselves, excluding shipping and insurance). Orders above EUR 150 are subject to standard customs and import VAT procedures.
• B2C only — IOSS does not apply to sales between businesses.
• Excise goods are excluded — alcohol and tobacco fall outside the IOSS scheme regardless of value.
• Monthly returns — unlike OSS (quarterly), IOSS returns are due monthly by the end of the following month.

OSS vs IOSS: Key Differences

Here is a side-by-side comparison of the two schemes:

Who Needs OSS?

You need OSS (or individual country VAT registrations, which is impractical) if all of the following apply:

1. You sell to consumers (B2C) in EU countries other than your own. If all your cross-border sales are to businesses with valid VAT numbers, the reverse charge mechanism applies instead, not OSS.
2. Your qualifying cross-border B2C sales exceed EUR 10,000 in the current or previous calendar year. This threshold is cumulative across all EU member states — not per country.
3. Your sales include digital services (SaaS, e-books, courses, templates), telecoms, broadcasting, or physical goods shipped intra-EU to consumers.

Non-EU businesses selling digital services to EU consumers must register under the Non-Union OSS scheme regardless of the threshold — the EUR 10,000 exemption only applies to EU-established businesses.

Below the EUR 10,000 threshold, EU-based businesses can voluntarily register for OSS. This is worth considering if you expect to cross the threshold soon, or if you prefer to charge local VAT rates from the start to avoid a mid-year compliance change.

Marketplaces and platforms: If you sell through a marketplace like Amazon EU, Etsy, or eBay and the marketplace is deemed the “supplier” for VAT purposes, the marketplace handles OSS on your behalf. Check your platform’s terms to understand who bears the VAT obligation.

Check your threshold with our OSS/IOSS Calculator and look up exact VAT rates with the EU VAT Rate Lookup.

Who Needs IOSS?

IOSS applies when you are shipping physical goods from outside the EU directly to consumers in EU member states, and each consignment is valued at EUR 150 or less. Common scenarios:

• Dropshippers sourcing from China (AliExpress, 1688, Alibaba) and shipping directly to EU customers — each parcel is typically well under EUR 150.
• Print-on-demand sellers using services like Printful or Printify fulfilling from US or Canadian warehouses.
• Etsy sellers based in the US, UK, or Canada shipping handmade or vintage items directly to EU buyers.
• Software companies that ship physical media (USB drives, printed manuals) from non-EU locations.

IOSS is not required for:

• B2B shipments — business customers with VAT numbers go through the standard import process.
• Consignments above EUR 150 — these are subject to standard customs procedures, import duty, and import VAT regardless of IOSS registration.
• Excise goods (alcohol, tobacco, tobacco products) — excluded from IOSS regardless of value.
• Goods stored in the EU before shipment — once goods are in an EU warehouse, intra-EU distance sales rules (OSS) apply, not IOSS.

For an in-depth look at how EU VAT works for online sellers, including IOSS scenarios, see the EU VAT for Etsy Sellers guide.

The EUR 10,000 Threshold (OSS Only)

The EUR 10,000 threshold is one of the most frequently misunderstood aspects of EU VAT. Here is exactly how it works:

• It is cumulative across all EU member states. If you sell EUR 4,500 to French consumers, EUR 3,000 to German consumers, and EUR 2,600 to Spanish consumers, you have crossed the threshold (EUR 10,100 total) even though no single country exceeds it individually.
• It is measured on net sales value (excluding VAT), per calendar year. The clock resets on January 1.
• Once crossed, it applies to all subsequent qualifying sales for the rest of that year and the entire following year. You cannot dip back below the threshold mid-year and revert to domestic rates.
• Below the threshold: EU-based businesses can charge their domestic VAT rate on all qualifying cross-border B2C sales. No OSS registration required (though voluntary registration is allowed).
• Above the threshold: you must charge the VAT rate of the customer’s country and report those sales through OSS (or register in each country individually).

For more detail on the threshold, including what sales count and what do not, see the EU OSS Threshold Explained article.

Can You Use Both OSS and IOSS?

Yes — and many businesses need both. OSS and IOSS are not mutually exclusive. They cover different sales channels and can run simultaneously.

A common scenario: a US-based e-commerce brand sells two types of products to EU consumers:

• SaaS software licences (digital services) → Non-Union OSS applies. The brand registers in, say, Ireland and files quarterly.
• Branded merchandise shipped from a US warehouse, typically under EUR 150 per order → IOSS applies. The brand appoints an EU intermediary, registers for IOSS, and files monthly.

These are separate registrations with separate returns on separate schedules. Running both adds administrative overhead, but it is far simpler than registering for VAT in every EU country where customers live.

Another common scenario: an EU-based Shopify store (Union OSS for intra-EU goods sales) also imports some products from a Chinese supplier and ships directly from China to EU buyers (IOSS for those shipments). The EU warehouse stock falls under Union OSS; the direct-from-China shipments fall under IOSS.

How to Register

Registering for OSS

For EU-based businesses (Union OSS):

1. Log in to your home country’s tax authority portal (e.g., Netherlands: mijn.belastingdienst.nl; Germany: BZSt; France: impots.gouv.fr; Spain: Agencia Tributaria).
2. Apply for OSS registration under “One Stop Shop” or the equivalent section in your tax portal. You need your VAT number, business address, and bank account details.
3. Registration takes effect from the first day of the calendar quarter after your application is approved. Some countries process it within days; others take the full quarter.
4. From the effective date, start charging the customer’s country VAT rate on all qualifying B2C cross-border sales.

For non-EU businesses (Non-Union OSS for services): you can register in any EU member state. Ireland, Luxembourg, and the Netherlands are popular choices due to English-language portals and accessible support. The process is similar to Union OSS but you do not need an intermediary.

For a complete step-by-step registration walkthrough, see the EU OSS Registration Guide.

Registering for IOSS

IOSS registration is more complex for non-EU businesses because it requires appointing an EU-based intermediary (also called a fiscal representative). The intermediary:

• Registers for IOSS on your behalf in an EU member state
• Files monthly IOSS returns and remits VAT collected
• Is jointly liable for the VAT, which is why they charge a service fee

Intermediary services typically cost EUR 50–200 per month depending on volume. Well-known providers include Taxually, Avalara, and Marosa. Once registered, you receive an IOSS number (format: IM followed by a country code and digits) that must be included in customs declarations when shipping to the EU.

EU-based businesses with stock stored outside the EU can register for IOSS directly (without an intermediary) through their home country’s tax portal.

Filing Returns

OSS Returns (Quarterly)

OSS returns are filed quarterly through your home country’s tax portal. The deadline is the end of the month following each quarter:

Each return lists your sales broken down by member state — the net sale value, the VAT rate applied, and the total VAT due for each country. You make one payment covering all countries; your home tax authority distributes the amounts.

Nil returns: Even if you had zero qualifying sales in a quarter, you must still submit a nil return. Missing a nil return can trigger reminders and eventually automatic de-registration from the scheme.

IOSS Returns (Monthly)

IOSS returns are filed monthly (not quarterly), by the end of the month following the reporting period. So sales made in January must be reported and paid by February 28 (or 29 in leap years). February’s sales are due by March 31, and so on.

Each monthly IOSS return lists:

• The IOSS registration number
• Total value of eligible goods sold to consumers in each EU member state
• VAT rate applied per country
• Total VAT due per country
• Total VAT due overall

For businesses using an intermediary, the intermediary typically handles the filing and payment on your behalf, though you are responsible for providing accurate sales data in time.

Common Mistakes to Avoid

• Confusing OSS and IOSS. The single most common mistake is applying the wrong scheme. If your goods are stored in the EU before shipment, OSS applies. If they ship directly from outside the EU and are under EUR 150, IOSS applies. The distinction matters for customs clearance — using your IOSS number on a parcel that should go through standard customs import procedures creates delays.
• Forgetting the EUR 10,000 OSS threshold. Many small sellers cross it without realising because their sales are spread across multiple platforms (Etsy, Gumroad, their own website). Add up all cross-border B2C sales across all channels to check your total.
• Applying OSS threshold logic to IOSS. IOSS has no revenue threshold. It applies per consignment: every shipment under EUR 150 is covered, regardless of your total annual sales. Do not wait to hit a threshold before registering for IOSS.
• Not separating marketplace sales from direct sales. If a marketplace is the deemed supplier for EU VAT (which Amazon Marketplace and Etsy often are), the marketplace handles VAT for those sales. You should not also include those sales in your own OSS or IOSS return. Counting them twice results in overpaying VAT.
• Missing IOSS filing deadlines. Monthly filing means 12 deadlines per year instead of 4. Set automated reminders. Late IOSS returns can result in penalties from the registration country and complications with customs if authorities notice a pattern of late compliance.
• Using the wrong VAT rate. Under both OSS and IOSS, you apply the VAT rate of the customer’s country, not your own. Rates vary significantly: Hungary charges 27%, Luxembourg 17%, Germany 19%, France 20%. Check current rates with the EU VAT Rate Lookup.
• Shipping goods above EUR 150 under IOSS. IOSS only covers consignments with an intrinsic value of EUR 150 or less. If a buyer orders EUR 180 worth of goods in a single shipment, that order falls outside IOSS scope — the buyer will be charged import VAT at the border. If you are splitting orders to stay under EUR 150 artificially, that is VAT fraud and carries severe penalties.

Quick Decision Tree

Use this decision tree to determine which scheme (or schemes) you need:

When in doubt, always consult a qualified VAT advisor for your specific situation. The decision tree covers the most common scenarios but cannot account for every edge case.

Bottom Line

OSS and IOSS serve different purposes and cover different types of sales. OSS is for cross-border B2C sales of services and intra-EU goods — single quarterly return, EUR 10,000 threshold for EU businesses. IOSS is for goods imported from outside the EU valued at EUR 150 or less — monthly returns, no threshold, fiscal intermediary required for non-EU businesses.

Many businesses need only one. Some need both. A few need neither (pure B2B sellers). The cost of getting this wrong is real: incorrect VAT collection, unexpected customs charges for buyers, penalties from multiple EU tax authorities, and the administrative burden of correcting past returns. The cost of compliance, on the other hand, is manageable with the right tools and processes.

Use the free OSS/IOSS Calculator to check whether your cross-border B2C sales exceed the EUR 10,000 OSS threshold. Look up current VAT rates for all 27 EU countries with the EU VAT Rate Lookup. And when it is time to invoice EU clients correctly — with the right VAT fields, reverse charge notes, and EU formatting — the Invoice Generator has you covered.

For more on EU VAT compliance, see the full EU VAT Rates 2026 Guide and the step-by-step EU OSS Registration Guide.