OSS vs IOSS vs standard VAT registration: which EU VAT scheme applies?
If you sell to consumers in more than one EU country, you have four possible ways to account for the VAT: do nothing special and tax everything at home, register for the Union OSS, register for IOSS, or register for VAT directly in each destination country. Which one applies depends on three facts: where the goods start their journey, how much you sell cross-border, and whether a marketplace is involved. Here's how to tell them apart, with the exact thresholds and the EU VAT Directive articles behind each one.
The four routes, in one sentence each
- Do nothing (stay under the threshold). Below a combined EUR 10,000 a year in cross-border B2C sales, you can keep charging your own country's VAT rate and filing only your normal domestic return.
- Union OSS. Once you're over that threshold, this lets an EU-established seller (or a non-EU seller holding EU stock) report all its intra-EU distance sales of goods and cross-border B2C services in one quarterly return, instead of registering in every customer's country.
- IOSS (Import One Stop Shop). A separate scheme for goods shipped into the EU from outside it, valued at EUR 150 or less per consignment, letting VAT be collected at checkout instead of at the border.
- Standard national VAT registration. Still required wherever you hold stock, make domestic (same-country) sales, or sell goods over EUR 150 imported from outside the EU without using IOSS.
Side-by-side comparison
| Scheme | Who it's for | What it covers | Threshold | Filing |
|---|---|---|---|---|
| Union OSS | EU-established sellers; non-EU sellers holding EU stock | Intra-EU distance sales of goods; cross-border B2C services (incl. digital/TBE services) | Applies once combined cross-border sales exceed EUR 10,000/year (Art. 59c); voluntary below it | Single quarterly return to your member state of identification |
| Non-Union OSS | Sellers with no EU establishment, selling services only | B2C services to EU consumers (e.g. a non-EU SaaS company billing EU consumers directly) | No EUR 10,000 threshold — applies to any non-EU seller of in-scope services | Single quarterly return, registering in one EU member state of choice |
| IOSS | Any seller (EU or non-EU) shipping goods into the EU from outside it | Distance sales of imported goods, excise goods excluded | EUR 150 or less, per consignment, excluding transport/insurance shown separately | Single monthly return; non-EU sellers generally need an EU-based intermediary |
| Standard registration | Anyone with stock or domestic sales in a given country, or imports over EUR 150 without IOSS | Domestic sales; stock held in that country; large imported consignments | No EU-wide threshold — follows each country's own VAT rules | That country's normal periodic VAT return |
Worked examples
1. Digital services, under and over the threshold. A Dutch software company sells e-books directly to consumers across the EU. Under Article 58 of the EU VAT Directive, VAT on electronically supplied B2C services is due in each consumer's own member state, not the seller's, and this destination rule has applied to EU-established suppliers (not just non-EU ones) since 1 January 2015. If the company's combined cross-border sales exceed the EUR 10,000 threshold, it either registers for VAT in every consumer's country or, far more simply, declares all of it through one quarterly Union OSS return.
2. Goods, via Union OSS. An Italian retailer's cross-border distance sales of goods pass EUR 10,000. Registering for Union OSS does not change which VAT rate applies — it still charges each customer the rate of their own country — but it replaces what would otherwise be a separate VAT registration in every destination country with a single quarterly return filed with Italy as its member state of identification, which then redistributes the VAT collected to the countries where it's actually due.
3. Low-value imports, via IOSS. A seller outside the EU ships parcels to EU consumers, each with an intrinsic value (excluding shipping) of EUR 150 or less. Registering for IOSS lets it charge VAT at checkout, at the consumer's own country rate, and remit it through one monthly return — so customs releases the parcel at the border without charging VAT again. Without IOSS, the parcel still clears, but VAT is collected on arrival, usually by the courier, adding cost and delay for the customer.
4. Marketplace sales. A non-EU seller lists a EUR 90 item through an online marketplace that sets the sale terms and takes the payment. Under Article 14a, the marketplace itself — not the underlying seller — is deemed to have received and resupplied the goods, and becomes the party liable for the VAT. This deemed-supplier rule can't be reassigned by contract between the marketplace and the seller; it applies by operation of law whenever a non-EU seller's sale is facilitated this way.
The two thresholds people conflate
Two completely different EUR figures govern these schemes, and mixing them up is the single most common mistake:
- EUR 10,000 (Article 59c) is an annual, EU-wide, combined ceiling across both distance sales of goods and cross-border telecommunications/broadcasting/electronic services — assessed on the current year's turnover together with the previous year's. It decides whether you tax at your own country's rate or the customer's. It is not per-country, and it is not separate for goods and services.
- EUR 150 is a per-consignment value limit (excluding transport, insurance and other separately-invoiced charges) that decides whether an imported parcel can use IOSS at all. It has nothing to do with annual turnover — a single EUR 160 parcel is simply outside IOSS, however small your total yearly sales are.
Common mistakes
- Assuming OSS replaces domestic registration. It doesn't. OSS and IOSS cover cross-border distance sales only; you still need an ordinary national VAT registration wherever you hold stock or make purely domestic sales.
- Treating "under EUR 10,000" as VAT-exempt. Staying under the threshold doesn't remove a sale from VAT — it just means you apply your own country's domestic rate instead of the customer's, and you can still opt into OSS voluntarily even under the threshold.
- Ignoring last year's sales. Article 59c looks at the current calendar year's cross-border turnover combined with the previous year's, not the current year in isolation.
- Not registering because "the marketplace handles it." Article 14a shifts VAT liability to the marketplace for facilitated sales by non-EU sellers, but sellers still need their own records separating domestic, OSS, and IOSS transactions.
Decision checklist
- Does the sale start outside the EU and does the parcel's declared value (excluding shipping) sit at or under EUR 150? → IOSS is available.
- Is the sale a cross-border intra-EU distance sale of goods, or a B2C service, and are your combined cross-border sales over EUR 10,000 a year? → Union OSS (or Non-Union OSS if you have no EU establishment and sell services only).
- Is the sale domestic (same country as the customer), or do you hold stock in that country? → You need a standard registration there regardless of OSS/IOSS status elsewhere.
- Is a marketplace setting the terms and taking payment for a non-EU seller's goods? → The marketplace, not the seller, is the deemed supplier under Article 14a.
This is educational material to help you recognise which scheme applies in outline — it isn't tax advice, and businesses should confirm their specific position with their own tax adviser or the relevant national tax authority before registering. Test yourself on these and the EU VAT Directive's other place-of-supply and special-scheme rules with PassDrill's EU VAT practice questions.
Source: EU VAT Directive (2006/112/EC), Articles 58, 59c and 14a, and Title XII Chapter 6 (Union scheme and import scheme), as amended by Council Directive (EU) 2017/2455 and Council Directive (EU) 2019/1995, effective 1 July 2021; Article 143(1)(ca); Council Directive (EU) 2020/285 (SME scheme reform, effective 1 January 2025); European Commission, "One Stop Shop" and "VAT e-commerce" guidance (vat-one-stop-shop.ec.europa.eu).