This content is for general informational purposes only and does not constitute tax, legal, or financial advice. VAT rules vary by jurisdiction and may change. Yakkyofy is not a tax advisor and is not responsible for tax decisions made based on this information. Consult a qualified tax professional for guidance specific to your business.
If you’re dropshipping to European customers in 2026, VAT compliance isn’t optional it’s embedded in the checkout experience your customers expect. The Import One-Stop Shop (IOSS) system, introduced in July 2021, is now standard infrastructure for cross-border e-commerce into the EU.
This guide covers what IOSS means operationally, why compliance prevents customs delays and unexpected fees, and how professional fulfillment providers handle VAT collection automatically.
What is IOSS and why it matters
IOSS (Import One-Stop Shop) is the EU’s centralized system for collecting VAT on goods imported from outside the European Union valued under €150. It allows sellers to collect VAT at checkout instead of customers paying customs fees on delivery.
Without IOSS registration:
- Packages trigger customs processing at EU borders
- Customers receive unexpected bills for VAT plus handling fees (typically €10-20)
- Many customers refuse delivery or file chargebacks
- Shipping times extend 5-10 days for customs clearance
- Brand reputation suffers from “hidden fees” perception
With IOSS registration:
- VAT collects at checkout with transparent total pricing
- Packages clear customs quickly without additional processing
- Customers receive products faster with no surprise fees
- Conversion rates typically improve when customers see total costs upfront
- Compliance with EU regulations avoids penalties
How IOSS works operationally
The compliance flow:
- Customer places order – Your store calculates VAT based on destination country (17-27% depending on EU member state)
- VAT collected at checkout – Customer pays product price + shipping + applicable VAT in single transaction
- IOSS number included on customs declaration – Fulfillment provider attaches your IOSS registration to shipping documents
- Customs clearance – EU customs recognize IOSS number and release package without additional processing
- Monthly VAT reporting – You (or your intermediary) report collected VAT through IOSS portal
- Tax remittance – Collected VAT distributed to appropriate EU member states
Who needs IOSS registration:
Any business shipping products valued under €150 from outside the EU to EU customers. This includes dropshippers sourcing from China, US-based stores selling to Europe, and non-EU fulfillment operations.
Who handles IOSS differently:
Marketplaces (Amazon, eBay) collect VAT directly and provide their own IOSS numbers. Sellers on these platforms don’t need separate registration—the marketplace handles compliance.
EU VAT rates by country
Each EU member state sets its own VAT rate. Your checkout system must apply the correct rate based on customer shipping address:
- Austria: 20%
- Belgium: 21%
- Bulgaria: 20%
- Croatia: 25%
- Cyprus: 19%
- Czech Republic: 21%
- Denmark: 25%
- Estonia: 20%
- Finland: 24%
- France: 20%
- Germany: 19%
- Greece: 24%
- Hungary: 27%
- Ireland: 23%
- Italy: 22%
- Latvia: 21%
- Lithuania: 21%
- Luxembourg: 17%
- Malta: 18%
- Netherlands: 21%
- Poland: 23%
- Portugal: 23%
- Romania: 19%
- Slovakia: 20%
- Slovenia: 22%
- Spain: 21%
- Sweden: 25%
VAT rates current as of February 2026. Rates are subject to change. Verify current rates with official EU sources or your tax advisor before implementing.
Most e-commerce platforms (Shopify, WooCommerce) support automatic VAT calculation based on shipping address. Configure these settings before launching EU sales.
How Yakkyofy Handles IOSS & VAT
When shipping to the EU, you have two primary options for IOSS compliance:
Option 1: Use your own IOSS number (recommended).
Register to obtain your own IOSS number through the dedicated EU portal if your company is based in the EU, or through a registered intermediary if your company is based outside the EU. Once you have your IOSS number, you can enter it directly into your Yakkyofy dashboard. From that moment on, all shipments to the EU for goods valued under €150 will automatically use your IOSS number, and you will not see any additional cost per order.
This is the approach we recommend for established dropshipping businesses. It provides direct visibility of VAT through the EU portal and allows you to maintain compliance and full control.
Option 2: Use the forwarder’s IOSS.
This is a service offered by some shipping providers, who cover IOSS using their own code as an additional service. A small extra fee will be applied to each order, which also includes the cost of using the forwarder’s IOSS. This can be a practical solution if you are waiting for your IOSS to be approved or if you want to test the service.
In both cases, the Yakkyofy operations team can assist you with your orders and with correctly filling in your data on the platform.
For questions regarding VAT obligations, registration requirements, and reporting, we always recommend consulting a qualified tax advisor. Requirements may vary depending on your company structure, country of establishment, sales volumes, and specific circumstances.
Common IOSS compliance mistakes
Not collecting VAT at checkout: Customers face surprise fees on delivery. High refusal rates and chargebacks follow.
Using incorrect VAT rates: Applying flat 20% VAT instead of country-specific rates creates compliance issues and customer confusion.
Forgetting to update IOSS number: If you register for IOSS but don’t provide the number to your fulfillment provider, packages still trigger customs fees.
Assuming marketplaces handle everything: While Amazon/eBay manage IOSS for their platforms, your independent store requires separate compliance.
Ignoring goods over €150: IOSS only applies to items under €150. Higher-value products require different customs procedures and duty payments.
Faq
Do I need IOSS registration if I sell on Shopify or WooCommerce?
Yes. Shopify and WooCommerce are platforms, not marketplaces. They don’t handle VAT collection on your behalf. You need your own IOSS registration (or an intermediary) to collect VAT at checkout and ensure packages clear EU customs without additional fees at delivery. Marketplaces like Amazon and eBay are the exception, they manage IOSS compliance directly for sellers on their platforms.
What happens if I ship to EU customers without IOSS?
Packages without a valid IOSS number go through standard customs processing. Your customer receives a bill at delivery — typically VAT plus a carrier handling fee of €10-20. Many customers refuse delivery or file chargebacks. Beyond customer experience, shipping without IOSS when you’re required to have it creates potential VAT compliance liability.
Does IOSS apply to all products I sell?
No. IOSS applies only to goods valued under €150 per shipment. Products above this threshold require standard import procedures including separate duty declarations and potentially customs duty payments depending on product category and origin. If you regularly sell higher-value items, consult a tax advisor about the correct customs procedure for your markets.
Do I need a separate IOSS number for each EU country I sell to?
No. IOSS is a single registration that covers all 27 EU member states. You register once through the EU OSS portal or via an intermediary, receive one IOSS number, and use it for all EU shipments. Your checkout system applies the correct country-specific VAT rate automatically based on the customer’s shipping address.
If VAT rates are different per country, how does my store calculate the right amount?
Most e-commerce platforms including Shopify and WooCommerce support automatic VAT calculation based on the customer’s shipping address. Once configured correctly with your IOSS number, the checkout automatically applies the rate for that customer’s EU member state ranging from 17% in Luxembourg to 27% in Hungary. Verify your platform settings before launching EU sales.
Does Yakkyofy register for IOSS on my behalf?
No. Yakkyofy does not register for IOSS on your behalf. We recommend registering your own IOSS number — it’s free, gives you direct control over VAT reporting, and avoids per-order fees. Once registered, you enter your number in the Yakkyofy dashboard and it’s automatically included on all EU customs declarations. If you prefer not to register independently, some carriers offer IOSS coverage for a small additional fee per shipment. For guidance on which approach fits your business, consult a tax advisor.
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