How do I handle VAT for EU customers as a US ecommerce seller?

EU VAT changed significantly in July 2021. The old €22 de minimis exemption is gone, all EU imports are now subject to VAT, and US sellers shipping to EU customers are expected to collect it.

The current EU VAT framework for US sellers

Orders under €150: VAT must be collected by the seller at the point of sale. The seller registers for IOSS (Import One-Stop Shop) in one EU member state, collects VAT at the rate of the customer’s country, and files a single monthly IOSS return. Without IOSS, VAT is collected at customs by the carrier, but this creates a poor customer experience and delivery delays.

Orders above €150: VAT is not collected by the seller at checkout, it’s collected at customs during the import process by the buyer’s country’s customs authority. The buyer pays VAT (and potentially customs duties) when the package clears customs.

EU VAT rates by country (representative examples)

Country	Standard VAT rate
Germany	19%
France	20%
Italy	22%
Spain	21%
Netherlands	21%
Sweden	25%
Denmark	25%
Ireland	23%
Poland	23%

Registering for IOSS

Choose an EU member state for IOSS registration (typically Ireland or the Netherlands are common for US sellers due to English language and favorable administrative setup)
Register through that country’s tax authority for an IOSS number
Collect VAT at checkout based on the customer’s country
File a monthly IOSS return covering all EU sales
Remit VAT collected to the IOSS member state, which distributes to each destination country

Many ecommerce platforms (Shopify, WooCommerce) and shipping software have IOSS support built in, check your platform’s international tax settings before manually implementing.

What happens without IOSS compliance

Packages may be held at customs until the buyer pays VAT
Customer experience suffers, surprise fees at delivery lead to returns and complaints
Some EU countries are increasing enforcement on non-compliant importers
Marketplace sales (Amazon EU) are typically handled by the marketplace, which may already be collecting VAT, confirm your platform’s handling before assuming

Frequently asked questions

Do I need to charge VAT to EU customers?

Yes, for most sales. As of July 2021, the EU eliminated the low-value VAT exemption (previously €22). All imports into the EU (regardless of value) are now subject to VAT. For orders under €150, the seller is expected to collect VAT at the point of sale. For orders above €150, VAT is typically collected at customs by the import process. Sellers with significant EU sales should register for the EU's Import One-Stop Shop (IOSS) to simplify collection and remittance.

What is the EU's IOSS (Import One-Stop Shop)?

The IOSS is a single registration point that allows non-EU sellers to register in one EU member state and remit VAT for all EU customer sales centrally, rather than registering separately in each of the 27 EU countries. It covers imports of goods under €150. A single IOSS registration and monthly return covers all EU-destination sales under the threshold. Above €150, VAT is handled through customs.