EU OSS for Non-EU Businesses: OSS and IOSS Guide 2026

Selling digital subscriptions or goods to EU consumers from the UAE, US or UK? The One Stop Shop (OSS) can simplify EU VAT through one portal. This guide compares the schemes as of October 2026, including registration, filing and the July 2026 customs change. First establish whether a sale is taxable in the EU: not every service supplied to an EU resident is.

Three schemes: non-Union OSS, Union OSS and IOSS

Expanded on 1 July 2021, OSS comprises three optional schemes. Register in one Member State of identification, submit a return for eligible sales and pay there. It distributes VAT to the Member States of consumption where tax is due.

Non-EU businesses can use all three schemes. Each chosen scheme must cover all eligible supplies across the EU, not selected countries.

OSS does not replace domestic VAT returns or allow input VAT deductions. Use an eligible national refund procedure or domestic return instead; refund eligibility and reciprocity conditions vary.

Which scheme fits your business model

Determine the service's place of taxation or the goods' dispatch location before selecting a scheme. Ordinary B2C consultancy follows supplier-location rules, unlike digital services; apply the relevant exceptions.

The EUR 10,000 threshold, and why it does not help non-EU sellers

The EUR 10,000 annual threshold covers cross-border telecommunications, broadcasting and electronic (TBE) services since 1 January 2019, and intra-EU distance goods sales since 1 July 2021. It preserves home-country VAT treatment, not tax-free sales, only when:

1. The supplier is established (or, without an establishment, lives) in only one EU Member State.
2. The sales are TBE services to consumers in another Member State, or goods shipped from the supplier's Member State to consumers in another one.
3. Those sales total no more than EUR 10,000, excluding VAT, in both the current and the previous calendar year.

UAE, US and Great Britain businesses do not meet the establishment condition, even with EU fixed establishments. The threshold also excludes imported goods and non-TBE services.

Worked example: a UAE app developer

A Dubai app company bills EUR 18,000 excluding VAT for Q3 2026 subscriptions. Destination VAT applies even if its annual sales had been only EUR 500. Assuming taxable subscriptions at these standard rates:

The return and the EUR 3,600 payment are due by 31 October 2026. If your prices include VAT, back the VAT out instead: a EUR 40 VAT-inclusive price paid by a German consumer contains EUR 6.39 of VAT (40 × 19/119). Rates change and some products carry reduced rates, so check the Commission's Taxes in Europe Database (TEDB) before each quarter.

IOSS, the EUR 150 limit and intermediaries

Since 1 July 2021 the former low-value import VAT exemption has gone. IOSS collects VAT at checkout and reports it monthly, enabling VAT-exempt import clearance when a valid IOSS number is supplied. Customs duty and carrier charges remain separate.

• EUR 150 per consignment, not per item. Intrinsic value excludes separately stated transport, insurance and taxes; combine goods in the consignment. Excise goods and consignments above EUR 150 are excluded.
• Goods must ship from outside the EU. Stock already sitting in an EU warehouse is not a distance sale of imported goods; it falls under domestic rules or Union OSS.
• Your IOSS number goes on the customs declaration. Give it to your carrier or postal operator for every parcel so customs treats the VAT as already collected.
• Non-EU sellers must appoint an EU-established intermediary. The intermediary registers you in its own Member State, receives your IM number, files your monthly returns and is liable for the VAT. Member States may add conditions, such as a guarantee.

The only exception is a business established in a country with which the EU has a recognised agreement on mutual assistance for the recovery of VAT, selling goods shipped from that country. HMRC's guidance says this currently covers only Norway and that businesses in Great Britain must use an intermediary. UAE and US sellers need one too.

The customs-duty change from 1 July 2026

Council Regulation (EU) 2026/382, adopted 11 February 2026 and applicable from 1 July 2026, removed the EUR 150 customs-duty relief. Until 1 July 2028, EUR 3 per item applies to consignments up to EUR 150 imported VAT-exempt under IOSS or sent by post. Other imports use normal tariff rules. This does not change IOSS's VAT limit. The Regulation requires monthly monitoring from October 2026 and permits proposals to widen the temporary duty.

For a US seller's EUR 120 taxable order to Spain, assuming a 21% VAT rate and no other taxable charges, checkout VAT is EUR 25.20. Customs duty is separate: confirm item counting and who pays with your carrier. A EUR 180 consignment cannot use IOSS and needs normal import treatment.

Registering in a Member State of identification

Registration is electronic. Choose a permitted Member State and confirm its portal requirements, payment process and effective date before charging VAT under the scheme.

1. 1Map your EU salesSplit the last 12 months of EU revenue into B2B and B2C, services and goods, and by where goods shipped from. This tells you which schemes you need.
2. 2Choose your Member State of identificationNon-Union OSS: any Member State. Union OSS: the country your goods ship from. IOSS: your intermediary's Member State.
3. 3Appoint an intermediary (IOSS only)Agree in writing who is liable, how VAT funds reach the intermediary before each deadline, and what sales data you send each month.
4. 4Apply on the portalProvide company, contact and bank details. You receive an EU number (non-Union OSS) or an IM number (IOSS); Union OSS uses your national VAT number in the dispatch country.
5. 5Set the right start dateNon-Union and Union OSS normally start on the first day of the next calendar quarter. If your first sale comes earlier, you can start from that date provided you notify the Member State of identification by the 10th day of the following month. IOSS starts on the day your number is allocated.
6. 6Set up checkout, invoicing and change noticesCharge the customer's country rate, capture evidence of where the customer lives, keep B2B sales with validated VAT numbers out of OSS, and report any change to your registration details by the 10th day of the following month.

Returns, payments, records and audits

• IOSS is monthly, due by the end of the following month. The September 2026 return, for example, is due by 31 October 2026.
• File even if you sold nothing. A nil return is required for every period you are registered.
• Deadlines do not move for weekends or public holidays, and you cannot file before the period ends.
• Report in euro unless a non-euro Member State of identification requires its own currency. Convert other currencies, such as AED, USD or GBP, at the European Central Bank rate on the last day of the period.
• Quote the return's unique reference number when you pay.
• Correct mistakes in a later return, within three years of the original due date. After that, corrections go directly to the Member State of consumption.

A late return triggers a reminder after 10 days. Consumption countries set penalties. Three consecutive reminders ignored for 10 days each constitute persistent non-compliance and trigger exclusion, potentially with a two-year re-entry restriction.

Records: keep them for 10 years

Keep records for 10 years from the transaction year's end, even after leaving OSS or IOSS. A 2026 sale therefore requires retention through 31 December 2036. Provide records electronically without delay; ignoring a reminder for a month triggers exclusion. Article 63c of Implementing Regulation (EU) No 282/2011 requires, among other details:

• the Member State of consumption and the type of supply;
• the date of the supply and the VAT payable;
• details of any payments on account;
• the information you used to decide where the customer is established or lives, such as billing address, IP address or card-issuing country.

The Commission publishes a standard audit file format, SAF-OSS, that every Member State accepts. Check that your billing system can export to it before the first request arrives; if it cannot, reviewing your accounting software set-up is worth doing early.

What changes from 2027 and 2028

The VAT in the Digital Age (ViDA) package, adopted on 11 March 2025, builds on OSS. As of October 2026 the published timeline is:

• 1 January 2027: minor OSS/IOSS legislative clarifications. The Commission published revised explanatory notes in July 2026.
• 1 July 2028: Single VAT Registration reforms expand OSS and introduce an own-goods transfer scheme and mandatory reverse charge for certain non-established, non-identified suppliers. They do not remove today's registration duties.
• 1 July 2028: the temporary EUR 3 customs duty is due to end. By 1 December 2027 the Commission must assess whether the new customs IT system will be ready, and it may propose an extension.
• 1 July 2030: digital reporting based on e-invoicing for intra-EU B2B transactions. See our guide to ViDA e-invoicing.

Checklist for non-EU sellers

• Split EU revenue into B2B and B2C, services and goods, and by where goods ship from.
• Assume the EUR 10,000 threshold does not apply to you.
• For EU-taxable B2C services, consider non-Union OSS and diary quarterly deadlines.
• Shipping low-value parcels from outside the EU: decide on IOSS, appoint an intermediary, give your IOSS number to carriers, and price in the EUR 3 per item duty.
• Holding stock in the EU: register domestically where the stock is, and use Union OSS for cross-border sales.
• Using marketplaces: confirm which sales the marketplace accounts for as deemed supplier.
• Selling B2B: validate customers' VAT numbers in the Commission's VIES service and keep those sales out of OSS.
• File nil returns, keep records for 10 years, and test a SAF-OSS export.
• Watch the 1 January 2027 and 1 July 2028 changes.

If you also sell into the US, the rules work very differently; see our guide to US sales tax nexus for foreign sellers. HOF Partners' VAT, GST and corporate tax team can map your EU sales and handle OSS or IOSS filings alongside your other returns.