EU VAT terms for cross-border sellers
Cross-border VAT has a small vocabulary and a large capacity for confusion, mostly because several of these schemes sound alike and cover different things. OSS and IOSS are one letter and one continent apart; the reverse charge is not a scheme you join but a rule that applies to you.
Each term below starts with what it is, then what it covers, then what it is commonly mistaken for.
OSS (One Stop Shop)
A scheme that lets you declare the VAT on cross-border sales to consumers in other EU countries through one quarterly return at home, instead of registering for VAT in each of those countries.
When it applies
Once your cross-border sales to EU consumers pass €10,000 a year, you must charge the destination country’s VAT rate. OSS is how most sellers then handle the paperwork: one registration, one return, one payment, distributed by your own tax authority.
You can also join voluntarily below the threshold, which is worth doing when the destination rates are lower than your own.
What it does not cover
OSS follows your sales, not your stock. Goods dispatched from a warehouse in another member state are a domestic sale there and need a local registration — no threshold protects you. It also cannot be used to reclaim foreign input VAT.
IOSS (Import One Stop Shop)
A scheme for goods sent to EU consumers from outside the EU in consignments worth up to €150. You collect the import VAT at checkout and declare it monthly, so the parcel is not stopped for VAT on arrival.
Why it matters commercially
Without IOSS the buyer pays the import VAT on delivery, plus the carrier’s handling fee — often €5 to €15. Customers resent the fee far more than the tax, and it produces refused deliveries and chargebacks.
Common confusion
IOSS is not OSS. OSS covers movements inside the EU; IOSS covers imports from outside it. They are separate schemes with separate registrations.
The €150 limit is per consignment, not per item, and it relieves customs duty only — VAT is due from the first cent.
The IOSS scheme step by step
One registration. You register in a single member state and receive an IM number that works for the whole Union. A seller established outside the EU registers through an intermediary established inside it, who files and is jointly liable — unless the seller’s country has a mutual assistance agreement with the EU.
At checkout. You charge the VAT rate of the buyer’s country, on consignments whose intrinsic value is 150 € or less. Intrinsic value is the goods alone: transport and insurance shown separately do not count towards the threshold.
At the border. The IM number belongs on the customs declaration, not on the invoice to the buyer. It reaches customs through whoever declares the parcel — the carrier or the postal operator — and this is where the scheme fails most often: no number on the declaration, and customs charges import VAT a second time, to the buyer, at the door.
Every month. One return, one payment, covering every member state you sold into; records kept for ten years. The scheme covers only VAT — duty does not arise below 150 €, and above 150 € the consignment leaves IOSS entirely.
Reverse charge
A mechanism where the buyer, not the seller, accounts for the VAT. You invoice a VAT-registered business in another EU country without tax, and they declare it in their own return.
What it requires
A valid VAT number for the customer, verified at the time of supply, and an invoice stating that the reverse charge applies. Both matter: the exemption rests on the number being valid, not on the customer telling you it is.
Where the risk sits
With you. If the number turns out to have been invalid, the tax authority reclaims the VAT from the supplier, not from the customer who supplied the wrong number. Keeping the VIES consultation number with the invoice is the standard evidence that you checked.
VIES
The European Commission service that confirms whether an EU VAT number exists and is authorised for cross-border trade. It queries each member state’s own database live.
What a negative result means
Not always that the number is fake. Common causes are a business registered domestically but not for intra-EU transactions, a cancelled registration, or a national database that is temporarily unreachable — an outage in one country looks exactly like an invalid number.
Keep the proof
Each query returns a consultation number. Storing it against the invoice is how you demonstrate due care if the customer’s registration is later found to have lapsed. Check at the time of supply, not once when the account was opened.
Postponed VAT accounting
A scheme in several member states that lets you account for import VAT on your periodic return rather than paying it at the border and reclaiming it later.
What it changes and what it does not
The amount is identical; only the timing moves. Instead of paying at clearance and waiting weeks for the refund, you declare and deduct in the same return, netting to zero.
For a regular importer this is one of the largest working capital improvements available, and it costs nothing but an application. Availability and conditions differ by member state, so check the country you actually clear in.
De minimis threshold
The value below which customs duty is not charged — €150 per consignment in the EU. It does not relieve import VAT, which is due from the first cent.
The part people get wrong
The old €22 VAT exemption for low-value goods was abolished in 2021. That is why parcels from Asia stopped being cheap: the duty relief remains, the VAT relief does not.
Splitting one order into several parcels to stay under €150 is treated as avoidance where the goods were ordered together, and it is exactly the pattern customs systems look for.