Selling to European customers from outside the EU can be challenging, especially when dealing with VAT collection and customs clearance. The IOSS (Import One-Stop Shop) number makes this process easier by allowing merchants to collect VAT at checkout and streamline shipping to EU customers. If you run a Shopify store and want to simplify cross-border sales, understanding IOSS is essential.
What is an IOSS number?
An IOSS number is a tax identification number that allows non-EU businesses to prepay VAT on low-value goods (under €150) when shipping to customers within the European Union. This system eliminates unexpected customs fees for buyers and speeds up the delivery process.
Before IOSS, many shipments were held at customs, requiring customers to pay VAT before receiving their orders. This often led to delays, unexpected costs, and dissatisfied customers. With an IOSS number, Shopify merchants can collect VAT at checkout and remit it directly to EU tax authorities, making the entire process smoother.
An IOSS number looks like this: IM + country code + sequence number — for example, IM3720000123. The "IM" prefix identifies it as an IOSS registration. This number must appear on the shipping label and customs documentation for every qualifying shipment — it is what customs scanning systems use to confirm that VAT has already been declared and does not need to be collected at the border.
What does IOSS stand for?
IOSS stands for Import One-Stop Shop, a system introduced by the EU on July 1, 2021, to simplify VAT compliance for e-commerce businesses selling to EU consumers. Instead of dealing with multiple VAT registrations in different EU countries, merchants can register for IOSS in just one EU member state and handle VAT for all their EU sales from there.
Does IOSS apply to you?
IOSS is specifically for non-EU merchants shipping goods into the EU. It does not apply to intra-EU shipments — goods that are already inside the EU at the time of sale.
IOSS applies if:
- Your business is based outside the EU (UK, USA, Norway, Switzerland, or anywhere else)
- You ship goods to consumers in EU member states
- The value of each individual shipment is €150 or less
- The goods are shipped directly from a non-EU location to the EU customer
IOSS does not apply if:
- Your goods are already in an EU warehouse when the customer orders them — in that case, OSS (One Stop Shop) is the relevant scheme, not IOSS
- The shipment value exceeds €150 — above this threshold, VAT and duties are collected at import in the normal way
- You are selling B2B to VAT-registered EU businesses — IOSS is a B2C scheme
For EU-based merchants: If you fulfil orders from a warehouse inside the EU and sell to consumers in other EU member states, your relevant VAT scheme is OSS, not IOSS. IOSS becomes relevant to you only if you also ship from a non-EU location — for example, if you use a non-EU supplier to drop-ship directly to EU customers.
Why IOSS matters — the problem it solves
Without IOSS, every parcel entering the EU from a non-EU origin is liable for import VAT at the destination country's rate. For consumer shipments, the carrier's customs brokerage typically contacts the recipient before releasing the parcel and requests VAT payment. The customer receives a notification saying their parcel is held at customs and they owe an unexpected amount before it will be delivered.
This creates three commercial problems for your Shopify store:
Abandoned deliveries. Some customers refuse to pay the unexpected charge and the carrier returns the parcel to you. You absorb the return shipping cost, refund the order, and lose the sale entirely.
Negative customer experience. Even customers who pay the customs charge feel misled — they believed they had paid the full cost at checkout. This perception, justified or not, generates negative reviews attributed to your store rather than to the tax system.
Slower delivery. Parcels waiting for customs VAT collection add 1–5 days to the delivery timeline. In a market where fast delivery is a baseline expectation, this erodes competitiveness.
With IOSS, you collect the applicable EU VAT at checkout and declare it through your monthly IOSS return. The parcel arrives at EU customs with your IOSS number on the label — customs scans it, confirms VAT has been pre-declared, and releases the parcel without stopping it. The customer's experience is identical to buying from a domestic store.
IOSS for non-EU merchants
If your Shopify store is based outside the EU but sells to EU customers, IOSS can be a game-changer. Here's how it benefits non-EU merchants:
- Faster delivery — Since VAT is prepaid, packages clear customs quickly, reducing shipping delays
- Improved customer experience — Buyers know the full cost upfront, avoiding surprise VAT fees upon delivery
- Simplified VAT compliance — Instead of registering for VAT in multiple EU countries, you only need one IOSS registration
- Competitive advantage — Customers prefer merchants who offer hassle-free shipping without unexpected charges
However, IOSS only applies to shipments valued at €150 or less. If an order exceeds this threshold, VAT and duties must be paid upon arrival in the EU — either through your carrier's DDP service or collected from the customer at import.
How to register for IOSS
For non-EU Shopify merchants, the IOSS registration process involves a few steps:
1. Choose an IOSS intermediary. If your business is outside the EU, you must register through an EU-based IOSS intermediary. These are licensed tax representatives who can act on your behalf. They file your monthly VAT returns, handle the remittance to EU tax authorities, and ensure your registration stays compliant. Intermediaries charge a fee — typically €50–200 per month depending on your sales volume.
2. Register for IOSS in an EU member state. Your intermediary registers on your behalf in their home EU country. The registration covers all your EU sales — you do not need separate registrations for each EU country. Common registration countries include Ireland, the Netherlands, and Germany, but it can be any EU member state.
3. Configure Shopify to collect EU VAT at checkout. Update your Shopify tax settings to charge the correct destination-country VAT rate to each EU customer. EU VAT rates vary — Germany is 19%, France is 20%, Finland is 25.5%, Hungary is 27%. Shopify can apply destination-based VAT rates with the correct configuration or through a tax app.
4. Display your IOSS number on shipments. The IOSS number must be included on the shipping label and on the customs declaration (CN23 or equivalent) for every qualifying shipment. Carriers need this number to confirm pre-declared VAT status to customs. If you use Packrooster, your IOSS number is added once in settings and applied automatically to every eligible shipment — see the setup instructions below.
5. File monthly VAT returns. Each month, submit a VAT return through your intermediary covering all EU sales in that month, broken down by destination country and VAT rate. Pay the total VAT amount to your intermediary, who remits it to the relevant EU tax authorities. Returns are due by the last day of the month following the reporting period.
Alternatives to IOSS
If your business is not eligible for IOSS or if you prefer a different approach, there are alternative ways to handle VAT when shipping to the EU.
DDP (Delivered Duty Paid) as an alternative to IOSS
DDP (Delivered Duty Paid) is a shipping arrangement where the seller takes full responsibility for paying VAT and customs duties before delivery. The customer receives their order without any additional payments — the cost is already covered.
How DDP works:
- The merchant collects estimated VAT and duties at checkout
- VAT and any applicable customs duties are paid in advance through the carrier's DDP service or a customs broker
- The shipment is marked DDP on the customs documentation
- The package clears customs without additional charges to the customer
Benefits of DDP:
- No €150 limit — unlike IOSS, DDP can be used for any order value
- Better customer experience — buyers won't face surprise customs fees or delays
- Works for B2B and B2C — IOSS is designed for B2C sales, while DDP works for both
- No monthly filing requirement — duty payment is handled per shipment rather than through a periodic return
When to choose DDP over IOSS:
- If you regularly sell products over €150, since IOSS does not cover higher-value shipments
- If you prefer to handle VAT through a carrier's DDP service rather than registering for IOSS directly
- If you want a single VAT solution for both low- and high-value orders, avoiding the split between IOSS (under €150) and unmanaged import VAT (over €150)
Using IOSS and DDP together
Many merchants use both: IOSS for sub-€150 orders (where the registration overhead is justified by the volume of qualifying shipments) and DDP for above-€150 orders. This gives full coverage — no customer ever receives a surprise VAT bill regardless of order value.
Common mistakes to avoid
Not including the IOSS number on every qualifying shipment. The IOSS number on the label is what triggers the automated customs clearance. A parcel without it — even if your IOSS VAT return includes that sale — will be treated as if no VAT has been declared and the customer will face an import VAT charge at delivery. Every eligible parcel needs the number, every time.
Mixing IOSS and non-IOSS shipments without clear separation. If some of your orders are fulfilled from an EU warehouse (where IOSS does not apply) and others from a non-EU location (where it does), your carrier and Shopify configuration need to reflect this correctly. Applying an IOSS number to a shipment that originates within the EU is incorrect and will cause customs clearance issues.
Confusing IOSS with OSS. IOSS is for goods imported into the EU from outside. OSS is for goods already inside the EU being sold across EU borders. If you fulfil from an EU warehouse, OSS is your scheme. Using IOSS incorrectly for EU-origin shipments is a compliance error.
Assuming IOSS covers all your EU VAT obligations. IOSS only covers B2C sales of goods under €150 shipped from outside the EU. It does not cover B2B sales, domestic EU sales, above-threshold shipments, or goods sold from EU stock. Your overall EU VAT compliance picture may involve both IOSS and OSS, plus potentially local VAT registrations if you hold stock in EU countries.
Using the wrong VAT rate. EU VAT rates vary significantly — from 17% in Luxembourg to 27% in Hungary. Applying a flat rate (your home country's rate, or the EU average) to all EU customers is incorrect. Shopify's tax settings need to apply the correct destination-country rate for each EU member state.
How to add your IOSS number in Packrooster Shipping
Once you have your IOSS number from your intermediary, adding it to Packrooster takes under a minute and means it is applied automatically to every eligible shipment — no manual entry per order.
Steps:
- Open Packrooster Shipping in your Shopify admin
- Go to General Settings
- Find your shipping locations (these come from your Shopify shipping locations)
- Press the Edit button next to the relevant shipping location
- Enter your IOSS number in the IOSS field
- Save
From that point, Packrooster automatically includes your IOSS number on the customs declaration and shipping label for every shipment from that location to EU destinations where the order value is under €150. No per-order action is required.
If you ship from multiple locations — some inside the EU, some outside — Packrooster handles the IOSS assignment per location. Non-EU locations use the IOSS number; EU locations do not, since IOSS does not apply to EU-origin shipments.
Don't have Packrooster Shipping yet? Install it from the Shopify App Store.
Learn more about Packrooster →
Summary
If you're a non-EU Shopify merchant selling to EU consumers, IOSS simplifies your VAT compliance and eliminates the customs friction that damages the customer experience on sub-€150 shipments. For above-€150 orders, DDP through your carrier is the equivalent solution — and many merchants use both in combination for full coverage.
Getting IOSS set up correctly is a one-time process: choose an intermediary, register, configure Shopify's tax settings, and enter your IOSS number in Packrooster. After that, it runs automatically on every eligible shipment.
Frequently asked questions
What is the €150 threshold — is it per item or per order? The €150 threshold applies to the total intrinsic value of the goods in a single shipment — essentially the order value excluding shipping and insurance. It is per shipment, not per item. A single order containing multiple items is assessed on its total value. If a customer orders three items worth €60 each (total €180), the shipment exceeds the threshold and IOSS does not apply — standard import VAT procedures apply instead.
Does IOSS apply to all EU countries? Yes. IOSS covers all 27 EU member states. A single IOSS registration gives you coverage for sales to customers in Germany, France, Finland, Estonia, Sweden, Denmark, and every other EU member state. You do not need separate registrations per country — that is the core purpose of the scheme.
Do I need an IOSS intermediary if my business is in the EU? No. EU-based businesses can register for IOSS directly through their home country's tax authority without an intermediary. An intermediary is only required for non-EU businesses. However, an EU business only needs IOSS if it is shipping goods from outside the EU to EU customers — for EU-origin goods, OSS is the applicable scheme.
What happens if I ship without an IOSS number? The shipment will be treated as a standard import. EU customs at the destination will assess import VAT on the goods and contact the carrier's brokerage to collect it from the recipient before releasing the parcel. The customer faces a surprise charge and a delivery delay — exactly the situation IOSS is designed to prevent.
Can I use the same IOSS number across multiple Shopify stores? Your IOSS number is registered to your business, not to a specific store. If you operate multiple Shopify stores from the same legal entity, the same IOSS number applies to all of them. If the stores are operated by different legal entities, each needs its own IOSS registration.
Is IOSS the same as VAT MOSS? No, but they are related. VAT MOSS (Mini One-Stop Shop) was an earlier EU scheme covering digital services sold to EU consumers. It was replaced and expanded in July 2021 by the broader OSS scheme, which covers physical goods as well as digital services. IOSS was introduced at the same time as OSS, specifically to handle low-value goods imported from outside the EU. MOSS no longer exists as a separate scheme — if you previously used MOSS for digital services, you are now under OSS.
