VAT is often discussed as if it were one European tax account. It isn't. The obligations change depending on where goods are located, who makes the sale, and whether the order is a consumer sale or a business transaction.
Two schemes appear in almost every cross-border e-commerce conversation: OSS and IOSS. They sound similar but deal with different situations.
OSS: simplifying certain European consumer sales
The One Stop Shop (OSS) is a VAT reporting mechanism for eligible consumer transactions. A seller can report VAT due in multiple EU member states through a single participating member state's OSS return rather than making separate OSS-type filings everywhere.
This does not mean the VAT rate is the same everywhere. The destination country's applicable rate generally matters for covered cross-border consumer sales.
It also does not mean a brand can store goods in any EU country without considering local VAT registration. Holding stock in a country can create local registration and reporting obligations outside the OSS return.
IOSS: consumer imports of low-value goods
The Import One Stop Shop (IOSS) is designed for eligible distance sales of imported goods in consignments with an intrinsic value not exceeding €150. It allows VAT to be collected from the buyer at checkout and reported through IOSS, with the corresponding import VAT exemption when the scheme is used correctly.
IOSS does not cover every type of goods, transaction or buyer. Excise goods are excluded and the scheme is focused on qualifying consumer-distance sales. Non-EU merchants may need an appointed EU intermediary unless an exception applies.
An order above €150 is not simply put through IOSS anyway. It needs an appropriate standard import and VAT process.
What if inventory is already held in an EU warehouse?
That is a different fact pattern. Goods that have already been properly imported and released into EU free circulation are no longer being imported separately with each consumer order.
The seller's VAT treatment then depends on where the stock is held, the customer's location and the identity of the legal supplier. A domestic sale from that warehouse may need reporting locally. A sale to a consumer in another member state may be eligible for Union OSS.
This is why the sales structure and inventory structure should be mapped before registrations are selected.
Importer of record and merchant of record are different roles
The importer is the party responsible under the chosen customs arrangement; the merchant or seller is the party entering into the customer sales contract. Sometimes one business does both, but not always.
An agent that sells in its own name can be treated as buying and reselling for VAT purposes, even when the physical inventory is held on consignment. That can affect VAT on the full sales value, not merely the agent's commission.
Likewise, the right to deduct import VAT is not automatically granted because a party's name appears on a customs document. It requires the relevant legal and tax conditions to be met.
A short decision checklist
Before expanding into the EU, write down:
- The legal seller of each transaction.
- The owner and physical location of inventory at the moment of sale.
- The importer, customs declarant and agreed delivery terms.
- Whether the customer is a consumer or a VAT-registered business.
- Which registrations, reporting mechanisms and invoices are required.
Don't choose OSS or IOSS first and reverse-engineer the transactions around it. Identify the actual flow, then determine which schemes can simplify it.
Official references
This is operational guidance, not a substitute for country-specific VAT advice.
General operational information, not legal, tax or customs advice. Requirements depend on the product, seller, destination and date. Check official guidance and seek qualified advice for your specific setup.