EU IOSS in 2026–2027: the €3 customs duty and January rule changes

What changed, and which dates are legally different

Three developments have arrived close together, but they do not have the same legal status or application date. Council Regulation (EU) 2026/382 was adopted on 11 February 2026 and published in the Official Journal on 18 February. The Commission’s revised addendum states that, from 1 July 2026 until 30 June 2028, the former customs-duty relief threshold of €150 is abolished for the relevant distance sales and a temporary fixed customs duty of €3 applies per item supplied in a consignment whose intrinsic value does not exceed €150. The duty is due when customs accepts the declaration for release into free circulation.

On 21 August 2026 the Commission revised its VAT addendum explaining how that €3 duty interacts with VAT under IOSS, the special arrangements and the standard import procedure. The addendum is guidance, not a new legislative act. It matters because the VAT base can differ depending on whether the duty is charged to the consumer at sale, becomes due only on import, or is collected through a non-IOSS route. Product and tax teams should therefore preserve the legal rule and the Commission interpretation as separate evidence objects.

A second change applies from 1 January 2027. Council Directive (EU) 2025/516, part of VAT in the Digital Age, was adopted on 11 March 2025, published on 25 March and entered into force on 14 April 2025. Member States must transpose the Directive’s Article 2 measures by 31 December 2026 and apply them from 1 January 2027. The Commission published revised Explanatory Notes and OSS Guidelines on 24 July 2026, followed by Commission Implementing Regulation (EU) 2026/1869 on 28 July. The guidance explains the changes; the Directive and directly applicable implementing rules provide the legal basis.

The third development is statistical rather than normative. On 31 August 2026, DG TAXUD published its report using 2025 data supplied by Member States. On 3 September it reported that approximately €125.45 billion of VAT had been declared through the three schemes since July 2021, including €38.8 billion in 2025. Those figures do not create a liability or prove that a particular business is compliant. They show the operational scale of a system that marketplaces, direct sellers, intermediaries, carriers and tax authorities increasingly depend on.

Who is affected: follow the transaction chain, not the brand

The immediate €3-duty change affects distance sales of imported goods supplied in qualifying consignments whose intrinsic value does not exceed €150. That chain can involve an underlying seller, a marketplace treated as the deemed supplier, an IOSS intermediary, a payment provider, a carrier or postal operator, a customs declarant and the consumer. A group brand may appear across the checkout, parcel label and invoice even though different legal entities perform those roles. The control model must identify each participant and its responsibility.

IOSS remains a voluntary simplification for eligible distance sales of imported low-value goods. When it is used correctly, VAT on the supply is collected at checkout and reported in the monthly IOSS return, while the import benefits from an import-VAT exemption. When special arrangements are used instead, the customer is liable for import VAT and a postal operator, carrier or other qualifying operator collects and remits it. Under the standard procedure, import VAT is dealt with through the ordinary customs process. Similar-looking parcels can therefore have different VAT bases, payers and evidence.

The 1 January 2027 changes reach a wider population. Electronic interfaces need to revisit deemed-supplier logic where the customer falls into the Commission’s described ‘group of four’: non-taxable legal persons, flat-rate farmers, enterprises using the SME exemption and other exempt taxable persons, subject to the acquisition-threshold and option conditions. Union OSS users need updated €10,000-threshold logic. Non-Union OSS suppliers need clarified customer-scope rules. IOSS applicants and Member States need controls for the interaction with the SME exemption scheme.

Energy and mobility businesses also enter the analysis. Until 30 June 2028, new Article 369aa treats specified cross-border supplies of gas, electricity, heat or cooling energy to consumers and the group of four as distance sales for Union OSS purposes. The Commission gives cross-border electric-vehicle charging as an example. That is not a general statement that every energy transaction belongs in OSS; the customer, supplier establishment, place-of-supply rule and effective period still need to agree.

For enterprise implementation, build a role map for each commercial model rather than one global IOSS flag. The same marketplace can be deemed supplier for one import flow, a facilitator with record-keeping obligations for another, and outside the deeming rule for a third. The same seller can use Union OSS, non-Union OSS, IOSS and domestic VAT returns for different supplies. One status on the company record cannot safely route all transactions.

The €3 duty is per item—and the VAT base is route-sensitive

The most dangerous implementation shortcut is to model the new charge as €3 per parcel. The Commission addendum describes a fixed customs duty of €3 per item supplied as a distance sale of imported goods in a qualifying consignment. A parcel containing four items can therefore create a different duty result from a parcel containing one item. Product catalogue, order-line and customs data must retain the item structure through fulfilment; a single parcel-level amount is not enough to reconstruct the calculation.

For an IOSS sale, the Commission says the €3 duty is normally not included in the taxable amount of the supply because the duty becomes due when customs accepts the import declaration, after VAT was collected when payment for the order was accepted. The import itself benefits from an import-VAT exemption where the IOSS conditions are met, so no import VAT is due on the €3 duty at that stage. This is a timing and route conclusion, not a general rule that customs duty is never part of a VAT base.

The result changes if the seller charges the consumer the €3 amount at checkout. The Commission states that, in those circumstances, it becomes part of the consideration obtained or to be obtained for the supply and enters the taxable amount for VAT. Checkout labels therefore matter less than the economic and transactional treatment. Calling an amount ‘customs recovery’ does not keep it outside the VAT base if the consumer pays it as part of the consideration for the order.

Under special arrangements, import VAT is due and the €3 customs duty must form part of the import-VAT taxable amount. The same inclusion applies under the standard import procedure. If goods are returned, the addendum says the VAT charged on the duty is refunded as part of the total import VAT, but the operation still needs a traceable link between order line, consignment, declaration, duty, VAT and return. A customer-service refund unconnected to the customs record can leave finance unable to prove the adjustment.

The addendum separately discusses an announced Union handling fee, expected from November 2026 at the earliest. It says the fee is compensation for a service rendered by customs acting as a public authority, falls outside the scope of VAT and, because it is not customs duty, does not enter the import-VAT taxable amount. ‘At the earliest’ is not a guaranteed application date. Teams should model it as an announced future charge with a separate effective-date control, not as a live November liability before the required measure applies.

The 2025 data shows the scale of the control problem

The Commission’s 2025 report records €38.8 billion declared through Union OSS, non-Union OSS and IOSS. That was €5.7 billion more than the €33.1 billion reported for 2024, a stated year-on-year increase of 17%. The sequence rises from €7.75 billion in the second half of 2021 to €19.5 billion in 2022, €26.3 billion in 2023, €33.1 billion in 2024 and €38.8 billion in 2025. The first point covers only six months and should not be annualised when making comparisons.

Union OSS accounted for €27.9 billion in 2025, non-Union OSS for €3.2 billion and IOSS for €7.7 billion. The IOSS amount increased 22% from €6.3 billion in 2024. These are VAT amounts declared through schemes, not the gross value of goods or services and not estimates of fraud prevented. They also do not show the revenue of any company. Using the correct unit matters when presenting the figures to executives or comparing them with commerce volumes.

Registrations also increased. At 31 December 2025 the report records 173,630 Union OSS registrations, 6,076 non-Union OSS registrations, 13,733 IOSS registrations and 1,394 intermediaries. Because an intermediary can represent multiple underlying sellers, intermediary count should not be read as seller count. Likewise, a registration is not proof that every transaction was classified or declared correctly.

For controls teams, the implication is straightforward. Scheme logic is operating at large and rising scale, and the 2027 changes arrive on top of mature transaction flows. A migration plan that only updates tax rates or a return form will miss seller eligibility, customer status, warehouse origin, deemed-supplier treatment, sale-time charges and refund evidence. Testing should sample each business-model branch, not simply reconcile the final VAT total.

Scheme mix and registration growth identify the pressure points

The 2025 composition is concentrated in Union OSS, but IOSS carries the direct customs dependency. A failed IOSS number, wrong consignment classification or seller/intermediary mapping can move the transaction from checkout collection to import collection and produce customer charges, delays or duplicate VAT. Non-Union OSS is smaller by declared VAT but can span many countries and customer types for a single non-EU service supplier.

Registration growth is not uniform. The report says Union OSS registrations rose 13% in 2025, non-Union OSS 8%, IOSS 7% and intermediaries about 3%. The absolute counts increased by 20,080, 448, 934 and 45 respectively. Those percentages use the Commission’s reported comparisons with 31 December 2024. They should not be treated as forecasts for 2026 or as evidence that scheme participation is growing at the same rate in every Member State.

Vendor capacity planning should use the underlying drivers rather than a headline registration count. Ask how many legal sellers, registrations, intermediaries, Member States of consumption, currencies, warehouses, customs declarations, order lines and correction events the system can handle. A platform that can display 13,733 IOSS registrations in a directory has not proved it can route a returned multi-item order or preserve a changed intermediary number over time.

Master data is especially important when an intermediary changes. The revised Explanatory Notes explain that a change of intermediary automatically leads to a new IOSS VAT identification number; a new number is also allocated if the intermediary remains the same but changes Member State of identification. A company-level field overwritten with the latest number will corrupt historical evidence. The number must be effective-dated and linked to the seller, intermediary, Member State of identification and transaction date.

The eight January 2027 changes that need a control owner

The Commission’s revised Explanatory Notes group the 1 January 2027 measures into eight topics. They are often described as minor clarifications, but several can alter transaction classification, timing or refund workflows. Each topic should have a named owner, an affected-flow inventory and a test result. Legal, tax, customs and product teams should not assume that a software vendor’s generic ViDA release has implemented every business-specific consequence.

First, the Article 14a(2) deemed-supplier provision is clarified to include supplies to the group of four as well as consumers. Marketplace onboarding and checkout logic therefore need enough evidence to distinguish these customer categories and determine whether their intra-Community acquisitions are below the national threshold and they have not opted into acquisition VAT. A VAT number alone may not reveal that status, and the status can change over time.

Second, amended Article 59c codifies how the EU-wide €10,000 threshold is calculated. Only intra-Community distance sales dispatched from the Member State where the supplier is established enter the threshold calculation; sales from stock in another Member State do not. Registering for Union OSS is treated as exercising the option for the normal destination place-of-supply rules and giving up use of the threshold. Warehouse origin and establishment therefore belong in the transaction record, not only in a year-end spreadsheet.

Third, amended Article 66 prevents Member States from applying specified alternative chargeability times to supplies reported under Union and non-Union OSS; the general rules apply. Fourth, Article 359 is clarified so that non-Union OSS can cover qualifying B2C services taking place in the EU even where the consumer is not EU-established or usually resident there. The Commission’s example is a US business supplying electronic services to US tourists while they travel in the EU.

Fifth, the Directive clarifies refund routes for costs connected with non-Union OSS, Union OSS and IOSS. The changes address the use of the EU refund Directive and the Thirteenth Directive, including restrictions that otherwise arise when a claimant has made supplies in the Member State of refund. Input VAT is still not deducted through an OSS or IOSS return. Finance must route the claim through the appropriate national return or refund procedure and retain the link to the scheme supplies.

Sixth, ViDA provides for an implementing act to secure IOSS and address abuse of IOSS numbers. The July 2026 guidance records that this requires further implementing measures; it should not be represented as a completed universal verification system. Seventh, Article 369m clarifies that IOSS is incompatible with the special VAT exemption scheme for small enterprises. A taxable person using the SME scheme must opt out before registering for IOSS; entry into the SME scheme requires deregistration from IOSS.

Eighth, until 30 June 2028, specified supplies of gas, electricity, heat and cooling energy to consumers or the group of four in another Member State can enter Union OSS through the temporary Article 369aa treatment. From 1 July 2028, broader Single VAT Registration measures apply, including further extension of Union OSS and the transfer-of-own-goods module. Do not activate the 2028 population early merely because the implementing architecture was adopted in 2026.

Build the evidence record before changing the tax engine

The central implementation problem is data lineage. A tax engine can calculate only from the facts it receives, and the 2026–2027 changes add facts that many order systems do not model explicitly: item count for duty, the time the consumer is charged, warehouse origin, seller establishment, intermediary relationship, Member State of identification, customer category, SME-scheme use and effective-dated IOSS number. Defaults can create a plausible result that cannot be defended later.

Create one transaction evidence object that connects the commercial order to the customs and VAT outcomes. It should retain the legal seller, marketplace or deemed supplier, customer destination and classification, each order line, intrinsic value, consignment identifier, dispatch country, IOSS or alternative route, IOSS number used, intermediary, checkout tax calculation, consumer-facing charges, payment-acceptance time, customs declaration, duty assessment, import-VAT result, return or correction, and the rule version applied.

Entity identity must remain separate from tax status. A valid-looking VAT identifier or IOSS number does not prove that it belongs to the seller in the order. A company registry record does not prove current IOSS eligibility. A customer with no VAT number is not automatically a consumer, while a supplied VAT number does not by itself settle the group-of-four or acquisition-threshold analysis. Store each claim with its source, retrieval time and decision owner instead of collapsing them into a single verified badge.

Versioning is non-negotiable. The legal rule changed on 1 July 2026, the Commission revised its interpretation material on 21 August, further clarifications apply on 1 January 2027, and the temporary customs-duty period is described as ending on 30 June 2028. A historical rerun should use the rule and identifiers effective on the original transaction date. Recalculating every old order with today’s configuration can manufacture false variances and destroy the audit trail.

Exception states also need distinct meanings. An unavailable authority or customs service is not an invalid number. A mismatch between seller and IOSS evidence is not proof that the seller is fictitious. A missing warehouse origin is not permission to choose the establishment country. Define retry, request-evidence, hold, manual-review and reject outcomes separately, and record which policy—not only which API response—caused the final action.

A practical implementation checklist for tax, finance and procurement

Do not start with a vendor demo. Start with a population of real flows and prove that the future configuration can reproduce their legal and accounting outcomes. Include multi-item consignments, a checkout duty recovery, special arrangements, standard import, a return, a changed intermediary, stock in a Member State other than the seller’s establishment, a group-of-four customer and a seller moving between SME exemption and IOSS. Edge cases are the product here; happy-path XML is not enough.

Tax should own the legal decision table and effective dates. Customs should own declaration and duty evidence. Product or commerce should own order-line, checkout and customer-status capture. Finance should own reconciliation, refunds and ledger treatment. Vendor management should own platform responsibilities and exit evidence. Data teams should own identifier lineage, matching rules and monitoring. If two teams believe the other owns a field, it will default silently in production.

Procurement should require a demonstrable answer to each question below. A vendor saying it is ‘ViDA ready’ or ‘IOSS compliant’ is not evidence of coverage. The contract should identify the jurisdictions and schemes supported, the specific release that implements the 2027 changes, the customer inputs required, the fields the vendor derives, service-level commitments, regulatory-update process, audit export and responsibility for incorrect routing.

Finally, run a dated cutover. Freeze the current rules, load effective-dated identifiers, test both 2026 and 2027 scenarios, reconcile outputs to expected VAT and duty, approve exceptions, then monitor by rule version after release. Keep an explicit rollback and manual-review route. A system that cannot explain why two otherwise similar consignments received different VAT treatment should not automate payment, declaration or customer charging.

• Inventory every OSS, non-Union OSS and IOSS registration, intermediary and Member State of identification.
• Map legal sellers, deemed suppliers, warehouses, dispatch countries and customer categories by business model.
• Change duty logic from parcel-level assumptions to the legally relevant item and consignment data.
• Separate IOSS, special-arrangements and standard-import tax-base calculations.
• Record whether the €3 amount is charged to the consumer at sale and include it in supply VAT when required.
• Implement the 1 January 2027 €10,000-threshold, customer-scope, chargeability, refund, SME and energy rules with effective dates.
• Retain IOSS numbers historically when an intermediary or Member State of identification changes.
• Build unavailable, ambiguous, mismatch and invalid states instead of one generic failure response.
• Test returns and refunds back to the original order line, declaration, duty and VAT event.
• Approve the cutover through tax, customs, finance, product, data and vendor-management owners.