As a non-European brand selling products to consumers in the EU, you quickly encounter European VAT — not one rate, but 27 different ones, one per member state. The EU has introduced two schemes to simplify this: the OSS (One Stop Shop) and the IOSS (Import One Stop Shop). But what exactly do these schemes entail, and how do they work when your business is based outside Europe?
Why European VAT is so complex
In the EU, consumers pay VAT in the country where they live — the so-called destination principle. If you ship from a single warehouse in the Netherlands to consumers in Germany, France and Poland, you are in principle required to register and remit VAT in all those countries.
🇪🇺 27 EU countries, 27 VAT rates — from 17% in Luxembourg to 27% in Hungary.
Previously, sellers had to register in each country separately, meaning separate bookkeeping, local tax advisors and a lot of paperwork. Two EU schemes have now made this significantly easier.
What is the OSS (One Stop Shop)?
The OSS is designed for sellers who deliver from a European warehouse to consumers in other EU countries. Thanks to the OSS:
- You file just one VAT return — in one EU country
- You pay VAT for all EU countries through one single portal
- You do not need to register separately in each country
The OSS applies above a threshold of €10,000 per year in cross-border sales within the EU. Below that threshold, you may apply the VAT rate of your own country.
Can a non-European seller use the OSS?
Not directly. To use the OSS, your business must be established in the EU or have a fiscal representative in the EU. For non-European sellers, the OSS is therefore only accessible through an intermediary — such as a Merchant of Record.
What is the IOSS (Import One Stop Shop)?
The IOSS is specifically designed for shipments sent from outside the EU to European consumers, with a value of up to €150. Without IOSS, the consumer pays VAT upon receipt — which leads to delays and a poor customer experience.
With IOSS:
- You collect VAT at the point of purchase
- Your parcels pass through customs faster and without extra costs
- The consumer has no surprises at delivery
- You use one registration for all 27 EU countries
📦 IOSS is mandatory for platforms such as Zalando and bol.com for shipments from outside the EU under €150 — if you do not handle this correctly, your account may be suspended.
Can a non-European seller use the IOSS?
Yes — but again with a catch. Companies outside the EU wishing to use IOSS must appoint an EU intermediary. This party is jointly responsible for VAT filing and remittance. This is not something you can simply arrange yourself from China, the US or Australia.
What changes on 1 July 2026?
In addition to the existing IOSS scheme, the EU is introducing a fixed customs duty of €3 per parcel for shipments under €150 from 1 July 2026. This makes direct shipping from third countries more expensive and less attractive. The expectation is that more and more brands will opt for stock in Europe, shipping orders from a European warehouse — making the OSS scheme more relevant than ever.
The simplest solution: a Merchant of Record
European VAT regulation has been deliberately simplified, but for non-European sellers it remains difficult to use OSS or IOSS directly. You always need a European entity or representative.
A Merchant of Record (MoR) solves this completely:
- The MoR is the registered seller in the EU
- The MoR is VAT-registered and files returns via OSS or IOSS
- You need no company of your own, no fiscal representative and no tax number in Europe
- VAT handling is fully automated — per country, per rate
💡 As Merchant of Record, Crossello acts as the official European seller for your products. We handle VAT registration, filing and remittance — so you can focus on your brand and your growth.
Summary: OSS vs IOSS vs MoR
OSS is for sellers with European storage delivering cross-border within the EU. IOSS is for direct shipments from outside the EU up to €150. Both schemes require a European entity or intermediary. A Merchant of Record covers both and is by far the simplest route to full VAT compliance for non-European sellers.
Want to know how Crossello can take your European VAT obligations completely off your hands? Get in touch for a no-obligation conversation.