Cross-border online trade has grown rapidly, yet shipping goods from third countries to EU consumers presents tax challenges. To simplify these processes and ensure fair taxation, the Import One-Stop Shop (IOSS) was introduced. This procedure allows businesses to centrally declare and pay VAT for distance sales of imported goods. We examine the legal foundations and requirements of the IOSS as of August 26, 2026.
What is the Import One-Stop Shop (IOSS)?
The Import One-Stop Shop is an electronic portal that has simplified the VAT processing of imports from third countries since July 2021. It is aimed at merchants who ship goods directly from a non-EU country to customers in the EU. The primary goal is to facilitate VAT collection for low-value goods and reduce administrative burdens. By participating, VAT is collected at the time of sale, ensuring customers face no unexpected charges upon delivery. Legally, this procedure in Germany is based on the German Value Added Tax Act (Umsatzsteuergesetz – UStG) [1].
Requirements for Using the IOSS
The use of the IOSS procedure is subject to specific conditions that must be strictly met. First, the procedure only applies to distance sales of goods imported from a third territory or a third country [1]. These must be consignments with an intrinsic value not exceeding 150 EUR [1]. This value limit refers to the individual consignment and not to the value of the individual items contained therein.
A significant exclusion criterion for the IOSS procedure is the type of goods. Excise goods, such as tobacco products or alcohol, are explicitly excluded from using the IOSS [1]. For these goods, general import regulations and taxation procedures continue to apply. Furthermore, the procedure is limited to B2C (Business-to-Consumer) transactions, meaning sales to private individuals or non-taxable persons within the EU.
The Process: From Order to Monthly Filing
For merchants using IOSS, the operational flow changes. The merchant must apply the correct VAT rate of the destination country and collect it from the buyer. Upon registration, the company receives an IOSS identification number, which signals to customs that VAT was collected, allowing tax-exempt import. Participants must declare sales electronically each month [1], reporting sales broken down by EU member state. Total tax is paid centrally to the competent authority in the registration state, which distributes the funds accordingly.
Tax Exemption on Import and Customs Aspects
A decisive advantage of the IOSS procedure is the exemption from import VAT. According to Section 5 (1) No. 7 of the German Value Added Tax Act (§ 5 Abs. 1 Nr. 7 UStG), the import of items within the framework of the IOSS procedure can be exempt from import VAT, provided that the valid IOSS identification number is presented to the competent customs offices at the latest when the import declaration is submitted [1]. This significantly accelerates customs clearance, as the verification of tax payment is omitted.
However, it is important to note that using the IOSS does not exempt one from general customs formalities. Even if import VAT is exempt, customs declarations must be submitted for every consignment [1]. For consignments up to a value of 150 EUR, no customs duties are generally payable, but compliance with formal documentation requirements remains mandatory. Merchants should therefore ensure that their logistics partners are correctly informed about the use of the IOSS number.
Practical Conclusion and Summary
The IOSS procedure represents a powerful tool for e-commerce merchants to manage the complexity of EU-wide tax law for imports from third countries. It not only improves internal administrative processes but also offers a clear competitive advantage through more transparent pricing for the final customer. Nevertheless, participation requires precise bookkeeping and strict adherence to monthly filing deadlines.
As international trade tax regulations require individual assessment, professional advice is recommended for implementation. Careful preparation and technical integration with IOSS systems are essential for legally secure trade. General statements on tax savings are not possible due to varying VAT rates across destination countries.
