New EU VAT Rules For E-Commerce Imports Take Effect In 2028

Starting July 1, 2028, new VAT rules will apply to e-commerce imports into the European Union. E-commerce sellers and platforms handling online sales will be responsible for collecting VAT on imported goods and can no longer shift this obligation to customers.

This change follows a directive adopted by the EU’s Council of Finance Ministers (ECOFIN) on July 18, 2025. It represents a significant change from how VAT is currently collected on cross-border e-commerce. To understand the impact, it’s helpful to look at how the current system works and why the EU wants to change it.

How VAT on Imported Goods Works Today

Right now, when a business outside the EU sells goods to a customer within the EU, VAT is due. This applies regardless of the value of the goods. Unlike customs duties, which apply only to shipments worth more than €150, VAT applies to all commercial imports.

VAT can be collected at two points. The first is at the time of import, which is the default method for most shipments. VAT is charged when goods enter EU territory and are cleared for free circulation. The person responsible for paying import VAT is the one presenting the goods to customs—this can be the seller or the carrier. VAT registration is not required just to pay import VAT. However, registering may be useful if the importer wants to deduct that VAT as input tax later.

The second method, introduced in 2021, applies only to low-value consignments—goods worth €150 or less, excluding items such as alcohol and tobacco. For these shipments, sellers can choose to collect VAT at the point of sale instead of at the border. To do this, the seller must register for the Import One-Stop Shop (IOSS). VAT is then remitted to a single EU country where the seller is registered. Under IOSS, import VAT is waived, which allows goods to clear customs more quickly. However, IOSS is optional. If a seller chooses not to use IOSS and the goods are valued at €150 or less, another special regime may apply. In this case, postal operators or express couriers can pay the import VAT on behalf of the customer and collect it at the time of delivery.

This means that most sellers can decide how to handle VAT on low-value shipments. Some register for IOSS. Others rely on couriers to collect VAT from the customer. If none of these special regimes is used, the default rules apply, and import VAT is due when the goods enter EU customs territory and are released for free circulation.

Delivery Options for E-Commerce Sellers Shipping to the EU

How do these VAT rules work in practice? For non-EU sellers shipping goods to EU customers, there are three common delivery methods.

One widely used option is DDP, or Delivered Duty Paid. Under DDP, the seller is responsible for all import charges, including VAT, customs duties, and clearance fees. These costs can be estimated in advance and included in the checkout price, so the customer pays everything upfront. After the sale, the seller forwards the estimated amounts to the carrier, who manages the entire import process. The carrier handles customs formalities, pays the import VAT, and clears the goods. In this arrangement, the carrier is treated as the importer of record, which means the seller does not need to register for VAT in the EU. DDP helps avoid unexpected charges at delivery, making it a popular choice for businesses that want to offer a smooth and transparent customer experience.

Another option is IOSS. If a seller chooses this route, they must register for an EU IOSS VAT number, collect VAT at checkout, and submit monthly VAT returns to the country where they’re registered. This allows goods to clear customs without paying import VAT. IOSS is only available for goods valued at €150 or less. It can be a cost-effective solution for sellers handling large volumes, but it often requires appointing an intermediary in the EU, which adds administrative complexity and expense.

The third method is to shift responsibility for the import to the customer. In this case, the carrier pays the import VAT on the customer’s behalf and collects it from them before delivery. This approach is simpler for the seller, as it avoids any VAT registration requirements in the EU. However, it often leads to poor customer experiences, especially if buyers weren’t expecting to pay anything beyond the checkout price.

Why the EU Is Changing VAT Rules for Imports

The EU has acknowledged that the current VAT system for imported goods is complex and inconsistent. Sellers must choose between multiple schemes, each with different rules, costs, and obligations. The €150 threshold limits the usefulness of IOSS, and allowing sellers to shift VAT collection to customers creates delays and a poor delivery experience.

As part of a broader Customs Reform—still to be finalized—the EU aims to simplify rules and tighten enforcement. Proposed changes under this reform include eliminating the €150 customs duty exemption for low-value goods, introducing a simplified tariff regime for such consignments, and expanding the IOSS to cover all goods, regardless of their value. Additionally, the reform would make online platforms the deemed importer, holding them responsible for collecting both VAT and customs duties at the point of sale.

However, the most immediate and concrete change is a separate directive adopted by ECOFIN on July 18. It focuses specifically on VAT for low-value business-to-consumer (B2C) goods imported into the EU and will take effect on July 1, 2028.

What Changes in 2028 and What Sellers Must Do

Under the new law, the seller or the platform facilitating the sale will be responsible for paying VAT in the country where the goods are imported. The option to let postal services or couriers collect VAT on the customer’s behalf will no longer exist. Sellers will no longer be able to shift this responsibility to the buyer.

To avoid dealing with import VAT at the border, sellers will need to use the IOSS system. If they choose not to use IOSS, they must register for VAT in every EU country where they have customers and goods are delivered. In addition, they’ll be required to appoint a tax representative in each of those countries unless their home country has a mutual assistance agreement with the EU—such as the UK or Norway.

Without VAT registration or payment, goods will not be cleared by EU customs. In rare cases, EU countries may allow the customer to pay import VAT as a fallback, but this will only apply if explicitly permitted by the Member State—and only in exceptional situations.

Why IOSS Will Become the Default Option for Most Sellers

The new rules do not change how IOSS works, nor do they fix its current weaknesses. Although the system still has gaps, it will become the only cost-effective way to comply with EU VAT rules on low-value imports.

While IOSS remains optional in law, the new framework effectively forces most non-EU sellers to use it. Alternatives will involve multiple VAT registrations, the appointment of local representatives, and significant administrative costs.

The businesses most affected will be those that sell low-value goods to EU customers and have, until now, avoided VAT obligations by using courier-based collection or other workarounds. From July 2028, these sellers will need to rethink their strategy for EU e-commerce sales.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of any organizations with which the author is affiliated.