EU VAT Rules for E-Commerce Imports 2028
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The European union is set to implement notable changes to its customs and VAT regulations,particularly impacting e-commerce platforms and sellers dealing with low-value goods imported into the bloc. These reforms, designed to streamline processes and ensure fair taxation, will fundamentally alter how businesses operate within the EU market.
The Evolving EU Customs and VAT Framework
The broader EU customs reform, which aims to modernize the system for e-commerce, includes several key proposals. Among these are the elimination of the €150 customs duty exemption for low-value goods, the introduction of a simplified tariff regime for such consignments, and the expansion of the Import One-Stop Shop (IOSS) to cover all goods, irrespective of their value. A crucial aspect of this reform is making online platforms the deemed importer, thereby holding them responsible for collecting both VAT and customs duties at the point of sale.
Though, the most immediate and concrete change stems from a separate directive adopted by ECOFIN on July 18. This directive specifically addresses VAT for low-value business-to-consumer (B2C) goods imported into the EU and is scheduled to take effect on July 1, 2028.
What Changes in 2028 and What Sellers Must Do
From July 1, 2028, the responsibility for paying VAT on imported goods will shift directly to the seller or the platform facilitating the sale, within the country of import. The current practice of allowing postal services or couriers to collect VAT from the customer at the point of delivery will be discontinued.Sellers will no longer be able to transfer this VAT collection obligation to the buyer.
To effectively manage import VAT and avoid complications at the border, sellers are strongly encouraged to utilize the IOSS system. For those who opt out of IOSS, the alternative is to register for VAT in every EU country where they have customers and where their goods are delivered. Moreover,such sellers will be required to appoint a tax representative in each of these countries,unless their home country has a mutual assistance agreement with the EU,such as the UK or Norway.
Failure to comply with VAT registration or payment requirements will result in goods being denied clearance by EU customs. While some EU countries may, in exceptional and explicitly permitted circumstances, allow the customer to pay import VAT as a fallback measure, this will be a rare exception rather than the norm.
Why IOSS Will Become the default Option for Most Sellers
The upcoming regulations do not alter the basic workings of the IOSS system, nor do they address its existing limitations. Despite these acknowledged gaps, the IOSS is poised to become the sole cost-effective method for non-EU sellers to meet EU VAT obligations on low-value imports.
Even though the IOSS remains legally optional, the new regulatory framework effectively mandates its use for the majority of non-EU sellers. The alternatives-which involve multiple VAT registrations across different member states,the appointment of local tax representatives,and the associated administrative burdens-will likely prove prohibitively costly and complex.
Businesses that primarily sell low-value goods to EU customers and have previously relied on courier-based VAT collection or other workarounds will be the most considerably impacted. from July 2028,these sellers must proactively reassess and adapt their strategies for engaging with the EU e-commerce market to ensure continued compliance and market access.
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.