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 compliance
IOSS compliance options
If you have your own IOSS registration: Provide your IOSS number to Yakkyofy’s operations team. We include it on customs declarations for EU shipments. You remain responsible for VAT reporting and remittance.
If you don’t have IOSS registration: Consult with your tax advisor about registration requirements. Packages without valid IOSS may face customs delays and additional fees charged to customers.
For marketplace sellers: Amazon and eBay handle IOSS compliance on their platforms.
Operational benefit: As an Italian company, Yakkyofy operates within the EU legal framework with invoicing that meets European business standards. Customs documentation follows EU requirements.
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.
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