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Comparison

IOSS vs DDP vs DAP: who pays VAT and duties from China to the EU

Under DAP your customer pays import VAT, duty and carrier fees at the door. Under DDP you pay them and recover them in your price. IOSS is the EU VAT scheme that makes DDP easy on parcels up to EUR 150: you charge VAT at checkout and, since July 2026, cover a EUR 3 duty per item.

9 min readChecked 16 October 2026By the Flashfulfil team

Under DAP your customer pays import VAT, duty and carrier fees at the door. Under DDP you pay them and recover them in your price. IOSS is the EU VAT scheme that makes DDP easy on parcels up to EUR 150: you charge VAT at checkout and, since July 2026, cover a EUR 3 duty per item.

Key takeaways

  • IOSS is a VAT scheme; DDP and DAP are shipping terms. With IOSS you effectively ship DDP for VAT up to EUR 150.
  • The EUR 3 per-item duty applies to EU parcels up to EUR 150 with or without IOSS since 1 July 2026 (European Commission).
  • Over EUR 150, IOSS stops working: you need full DDP or you are back to DAP.

What do IOSS, OSS, DDP and DAP actually mean?

DAP (Delivered at Place) and DDP (Delivered Duty Paid) are Incoterms, rules from the International Chamber of Commerce that "allocate tasks, costs, and risks between buyer and seller" (trade.gov, Know Your Incoterms). Under DDP, all obligations, including import clearance and duties, sit with the seller. Under DAP, the buyer handles import clearance and pays duties and taxes. Shops often say "DDU" for this.

IOSS (Import One Stop Shop) is the EU's VAT scheme for distance sales of imported goods in consignments "not exceeding 150€", in place since 1 July 2021 (EC VAT One Stop Shop portal). You charge the buyer's VAT at checkout and pay it monthly through one EU registration.

OSS (One Stop Shop) covers sales from stock already inside the EU, such as a Dutch warehouse shipping to Germany. If everything ships from China, IOSS is the relevant scheme. The July 2026 changes are explained in our IOSS and EUR 3 duty guide.

Who pays VAT and duty under each, and when?

IOSS (orders up to EUR 150)DDP without IOSSDAP (DDU)
TypeEU VAT schemeShipping termShipping term
Who pays import VATYou, collected from the buyer at checkoutYou, via your carrier or brokerYour customer
When VAT is paidMonthly IOSS returnAt import, billed to you by the carrierAt the door or before release
EUR 3 duty per itemApplies; paid by the declarant, charged back to youApplies; billed to youApplies; usually billed to the customer
Carrier clearance feeUsually none for the customerBilled to youUsually charged to the customer
Orders over EUR 150Not coveredWorks at any valueWorks at any value
Setup effortIOSS registration, usually an EU intermediaryCarrier account with a DDP serviceNone
Main riskWrong number or wrong rate on parcelsPaying duty you did not price inRefused parcels and chargebacks

The legal debtor for duty is the declarant. The Commission ranks who that should be: first the IOSS holder, then the user of the "special arrangements" (normally the post or courier), then an indirect representative, and only residually the consumer (Commission EUR 3 guidance, version of 5 October 2026, section 6.4). Without IOSS, the post or courier collects the import VAT at the standard rate from the customer (Revenue Ireland, special arrangements).

What does the customer experience at delivery under each?

IOSS and DDP: the checkout price includes VAT, the parcel clears in your name and arrives like a domestic order. This is what EU shoppers expect.

DAP: the customer gets a text or a card asking for payment before delivery: import VAT at the local rate (21% in the Netherlands, 19% in Germany, 25% in Sweden, per Your Europe), the EUR 3 duty per item, and the carrier's own fee. Many refuse, and you lose the product, the shipping and the sale. The Commission guidance also limits refunds of the EUR 3 duty on returned low-value goods, so a refusal is not free. Our guide to damaged products and returns covers the rest.

How does the EUR 3 duty change the maths since July 2026?

Before 1 July 2026, IOSS parcels up to EUR 150 paid VAT only. Council Regulation (EU) 2026/382 ended that relief and introduced a temporary EUR 3 duty "per item", meaning per group of goods sharing a tariff classification, until 1 July 2028 (PwC Germany). Five T-shirts pay EUR 3; a T-shirt and a watch pay EUR 6 (European Commission).

What that changes:

  1. No route avoids it. The Commission's intention is that the duty applies "regardless of the VAT scheme used (IOSS, Special Arrangements or Standard VAT)". Skipping IOSS no longer saves duty.
  2. Bundles cost more. A three-product bundle can carry EUR 9 of duty. A single-product order carries EUR 3.
  3. A handling fee is coming. The Commission guidance says a EUR 2 Union handling fee per item is expected from 1 November 2026, on parcels of any value sold in distance sales. Check the final act before pricing it in.

On a EUR 25 product, EUR 3 is 12% of the price. Model it per product in the margin calculator.

What happens for orders above EUR 150?

IOSS cannot be used. The order is imported under the standard rules: import VAT plus duty at the product's normal tariff rate. Shopify's own help says "orders greater than €150 EUR have import VAT and duties applied" (Shopify Help, EU tax reference).

Your choice is then DDP, where your carrier invoices you and you must know each product's duty rate, or DAP, where your customer pays. If high-value orders are a big share of sales, compare an EU stock model too: China fulfillment vs an EU 3PL.

How do I set this up in Shopify?

For IOSS (VAT on orders up to EUR 150): Shopify says IOSS registration "is required if you intend to charge VAT during the checkout process", and that "using OSS and IOSS at the same time isn't supported" (Shopify Help, EU tax reference). If your company is EU-based and already uses OSS, talk to an adviser before changing your setup.

For duties at checkout (DDP): Shopify can charge duties and import taxes at checkout if your store meets its requirements. Products need HS codes, stores using Shopify shipping labels need a carrier that supports DDP labels, and stores on Shopify Fulfillment Network cannot use it. Otherwise, Shopify points to third-party apps (Shopify Help, charging international duties; duties and import taxes).

Make sure your fulfillment partner ships on the same terms: duty collected at checkout plus a DAP parcel means your customer pays twice. Agree it in your shipping setup.

What about customers in Israel, Canada, Australia and New Zealand?

  • New Zealand: overseas sellers collect GST on goods valued NZ$1,000 or less sold to consumers, once supplies to NZ consumers reach NZ$60,000 in 12 months. Above NZ$1,000, GST and duty are collected at the border (NZ Inland Revenue; registration).
  • Canada: shipments from countries other than the US and Mexico are duty and tax free only up to CAD 20, by mail or courier. Above that, duties and taxes apply (CBSA, low value shipments). China-origin parcels therefore usually pay something at import.
  • Australia: GST applies to low-value goods of A$1,000 or less sold to consumers, collected by sellers whose sales reach A$75,000 in 12 months (trade.gov summary). The ATO page could not be loaded for this article: verify on ato.gov.au.
  • Israel: the personal import exemption has changed several times since late 2025. In June 2026 the Knesset revoked a USD 130 threshold, restoring USD 75 (Times of Israel, 2 June 2026). Unverified on an official Israeli source: check with the Israel Tax Authority or your carrier.

This is general information, not tax advice. Check the EU VAT One Stop Shop portal and a local adviser before you change your setup.

Frequently asked questions

Is DDP the same as IOSS?

No, but they overlap. DDP is a shipping term: the seller pays import charges. IOSS is an EU VAT scheme for parcels up to EUR 150 where you charge VAT at checkout. Using IOSS gives your customer a DDP-like experience for VAT. You still need someone to clear the parcel and pay the EUR 3 duty, and above EUR 150 you need a real DDP service.

Do I need OSS if I only ship from China?

Usually not. OSS covers goods sold from stock already inside the EU. If every order ships from China to EU consumers and is worth EUR 150 or less, IOSS is the relevant scheme. If you also hold stock in an EU warehouse, you may need OSS for those sales. Shopify does not support both at once, so get advice before you register.

Why did my customer get a customs bill?

Most likely the parcel shipped without IOSS or DDP, so the courier collected import VAT, the EUR 3 duty per item and its own fee from your customer. It also happens when the IOSS number is missing or wrong, or the order was over EUR 150. Check the shipping terms and the IOSS data with your fulfillment partner.

Can I refund customs fees to my customer?

You can refund them as a goodwill gesture to save the sale. Getting the money back from customs is harder. The Commission guidance says the EUR 3 duty on returned low-value distance sales can no longer be recovered by invalidating the declaration, and the coming EUR 2 handling fee is non-refundable. Fixing the shipping terms is cheaper than refunding fees.

Does IOSS work with every carrier?

No. The carrier or post has to pass your IOSS number to customs electronically. Whether that happens depends on the service and the route. Ask your fulfillment partner which services carry IOSS data for each destination, and confirm it per product in your quote.

Should prices include VAT for EU shoppers?

In practice yes. EU consumers expect the price they see to be the price they pay, and VAT added later looks like a hidden fee. With IOSS you charge the destination country's rate, so many stores set VAT-inclusive prices per market. Check consumer price display rules in each country you sell to.

What changes in 2028?

The EUR 3 flat duty is temporary until 1 July 2028. After that, the plan is for distance sales to pay normal duty rates regardless of value, through the new EU Customs Data Hub. The Commission must assess by 1 December 2027 whether the hub will be ready and may propose an extension. Expect duty to depend on each product's tariff rate.

Work with Flashfulfil

Flashfulfil is a China-based fulfillment partner with its own office and warehouse in China, built by founders who ran their own dropshipping stores. We source, store, check quality, pick, pack and ship worldwide through carrier partners, with 24h processing and 99.9% order accuracy. Clients sell into the Netherlands, Belgium, Germany, Sweden, Israel, Canada, Australia and New Zealand. Pricing is quote-based; how each route is declared we confirm per product in your quote. Ask us or check your margins in the margin calculator.

Sources

All checked 16 October 2026.

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