The Economic and Financial Affairs Council (ECOFIN) agreed on a draft directive.
The Economic and Financial Affairs Council (ECOFIN) on May 13, 2025, agreed on a seeking to incentivize the use of the value added tax (VAT) import one-stop-shop (IOSS).
Background
As part of the 2021 EU VAT e-commerce package, the EU introduced a new concept of distance sales of imported goods to tax remote sales of goods from outside the EU to consumers within the EU. To facilitate compliance with collecting VAT on these sales, the EU introduced the IOSS. The IOSS is applicable for consignments (shipments of goods) with a value not exceeding 鈧�150, which are not subject to excise duties. If a business is registered under the IOSS, VAT can be charged at the point of sale to customers in the EU based on the VAT rate of the member state where the goods are shipped to. The business then declares and pays this VAT to the tax authorities monthly through the IOSS electronic portal. If a business is not registered in the IOSS, the import VAT is paid by the customer upon delivery of the goods and is collected by the postal operator or courier service (so called special arrangement). For consignments above 鈧�150, the standard import VAT rules continue to apply.
The European Commission on May 17, 2023, published a customs reform package consisting of three legislative proposals, one of which was a directive on VAT rules for distance sales of imported goods and import VAT.
Proposed directive
Among other things, the original proposal contained provisions on removing the customs exemption for goods worth up to a threshold of 鈧�150. However, the Council decided to set these original provisions aside and to discuss them in the context of the ongoing customs reform negotiations. The text of the directive on which member states reached a general approach focuses on measures to encourage use of the IOSS.
To achieve this objective, the proposed directive would make sellers (or marketplaces facilitating the sale) of such distance sales of imported goods liable to pay import VAT if they are not registered under the IOSS. Non-EU traders not registered under the IOSS would be required to appoint a tax representative assuming all VAT obligations related to all eligible import consignments. However, that obligation would not apply if the trader were established in a country listed in Commission Implementing Decision (EU) 2021/942 (currently Norway and the UK). The conditions for appointing such a tax representative for the payment of VAT would be aligned with the obligation of non-EU established traders to appoint an intermediary for the use of IOSS. Moreover, an indirect customs representative, acting as a tax representative, could be held accountable for paying the import VAT. Since being a tax representative is optional for the indirect customs representative, member states would be allowed to hold those who do not act as tax representatives jointly and severally responsible for the import VAT. Additionally, member states are expected to have the authority to hold other individuals, such as those responsible for paying the customs debt in the event of customs irregularities, jointly and severally accountable for the import VAT.
Where the IOSS is not used, the import VAT on eligible consignments would be collected directly by the member state where the import occurs. By contrast, in cases where the IOSS is used, the importation is exempt from import VAT and the VAT on the distance sales of imported goods is collected by the seller and paid to their member state of identification, that transmits the VAT to the relevant member states of consumption. To protect the customer from the negative impact of non-compliance by those responsible for VAT payment, member states may allow the customer to pay the import VAT. The customer would retain the right to reclaim the import VAT from the seller or online marketplace under applicable civil law.
Finally, the directive would repeal the special arrangement since it allows to shift the import VAT obligation the customer when the IOSS is not used, which runs counter to the purpose of the proposed directive.
Next steps
The European Parliament will be consulted on the agreed text and asked to deliver its opinion. The text will then need to be formally adopted by the Council before being published in the EU鈥檚 Official Journal and entering into force, which is currently proposed to be July 1, 2028.
乐鱼（Leyu）体育官网 observation
The proposed changes would impact direct sellers (and marketplaces) selling low-value goods to EU customers who have so far not registered for IOSS, making it more onerous for them to sell to EU consumers because of the requirement to pay import VAT, appoint a tax representative, and potentially see their consignments blocked at customs. Additional changes could be part of the broader upcoming customs reform proposal, including the repeal of the 鈧�150 threshold, as well as a flat customs duty for some consignments.
For more information, contact a 乐鱼（Leyu）体育官网 tax professional:
Philippe Stephanny |聽philippestephanny@kpmg.com
Chinedu Nwachukwu |聽chinedunwachukwu@kpmg.com