EU Council Approves VAT Simplification Rules for Online Sales

The Council of the European Union has agreed on new measures to simplify value-added tax (VAT) collection on cross-border e-commerce sales. The changes are designed to improve tax compliance, reduce administrative requirements for businesses and align VAT procedures with the EU's revised customs framework.

Agreed on November 9, 2026, the measures expand the use of the Import One Stop Shop (IOSS), allowing eligible online sellers and marketplaces to account for VAT on imported goods regardless of their value.

The agreement represents another step in the EU's broader effort to modernise digital commerce taxation and strengthen oversight of international online sales.

EU Removes the €150 IOSS Threshold

Under the existing framework, non-EU sellers and online platforms can use the Import One Stop Shop to declare and pay VAT through a single registration in an EU member state. However, the simplified system has been limited to imported parcels valued at less than €150.

The newly agreed measures remove this threshold, extending IOSS coverage to imported goods of all values, subject to the applicable exclusions.

This will allow businesses selling higher-value products to use a centralised VAT reporting system rather than managing more complex tax procedures across different markets.

The change is also intended to improve tax collection and reduce the administrative workload for customs authorities.

Online Marketplaces to Take Greater VAT Responsibility

A major part of the agreement concerns the responsibility of online platforms for collecting and reporting VAT.

From July 1, 2028, non-EU online platforms covered by the rules will be treated as deemed suppliers for VAT purposes when facilitating sales of imported goods into the European Union.

This means the platform itself will be responsible for collecting VAT from the customer and paying it to the relevant tax authorities, rather than leaving the responsibility entirely with the underlying seller.

The new framework is expected to make VAT collection more consistent across international online marketplaces.

New Rules Cover Goods Stored in EU Customs Warehouses

The agreement also extends IOSS coverage to qualifying goods stored in special customs warehouses within the EU by non-EU operators.

These facilities allow online platforms to import products in bulk, store them under customs supervision and prepare individual shipments when customers place orders.

Extending the simplified VAT system to eligible sales from these warehouses is expected to streamline customs processing and improve monitoring of cross-border e-commerce transactions.

No New VAT Tax for Consumers

The European Commission has clarified that the changes do not introduce a new VAT charge or increase existing national VAT rates.

VAT is already applicable to imported goods regardless of their value. The reform changes how the tax is collected and reported.

Where the IOSS system is used, consumers will generally see VAT included in the final checkout price instead of being asked to pay it separately when the parcel arrives.

This approach is intended to improve pricing transparency and reduce unexpected payment requirements during delivery.

Additional Safeguards to Improve Tax Compliance

The new framework also introduces stronger safeguards to reduce the risk of VAT fraud.

The European Commission will work on harmonising requirements for intermediaries that manage IOSS obligations on behalf of non-EU businesses.

These measures are intended to strengthen financial reliability, administrative capacity and compliance across the system.

The Commission is also expected to review the effectiveness of the updated IOSS framework by December 2030.

What the New Rules Mean for E-Commerce Businesses

The changes could have significant implications for international sellers, online marketplaces and businesses shipping products into the European Union.

Platforms will need to review their VAT collection systems, checkout processes and reporting procedures to prepare for the expanded responsibilities.

For smaller businesses, the wider use of IOSS could simplify cross-border tax administration by reducing the need for multiple VAT registrations.

The reform also reflects the EU's broader approach to managing the rapid growth of online commerce through improved digital reporting, customs coordination and stronger tax enforcement.

Implementation Expected From July 2028

Although the Council has agreed on the measures, the legislative process is not yet complete. The European Parliament must be consulted before the Council formally adopts the new rules.

The measures are scheduled to apply from July 1, 2028, alongside the launch of the EU Customs Data Hub.

The updated framework is expected to create a more centralised approach to VAT collection, strengthen compliance and support the continued growth of cross-border digital commerce.