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Guide

IOSS and the EUR 3 EU customs duty: what changed on 1 July 2026

Since 1 July 2026, parcels worth EUR 150 or less that are sold to EU consumers no longer enter duty free. Each item now pays a temporary EUR 3 customs duty, whether or not you use IOSS. IOSS still decides who pays the VAT and when. A EUR 2 handling fee per item is expected next.

9 min readChecked 16 October 2026By the Flashfulfil team

Since 1 July 2026, parcels worth EUR 150 or less that are sold to EU consumers no longer enter duty free. Each item now pays a temporary EUR 3 customs duty, whether or not you use IOSS. IOSS still decides who pays the VAT and when. A EUR 2 handling fee per item is expected next.

Key takeaways

  • The EUR 150 duty exemption ended on 1 July 2026. A flat EUR 3 duty per item applies until 1 July 2028 (European Commission).
  • An "item" means goods sharing the same tariff classification, so five T-shirts pay EUR 3, a T-shirt plus a watch pay EUR 6.
  • The duty applies with or without IOSS. IOSS only changes how VAT is collected: at your checkout instead of at the customer's door.
  • A EUR 2 Union handling fee per item is expected from 1 November 2026, also on parcels over EUR 150.
  • Split shipments count as separate consignments, so each parcel pays its own duty.

What is IOSS, and does it apply to my orders from China?

The Import One Stop Shop (IOSS) is the EU scheme for VAT on distance sales of imported goods in consignments "not exceeding 150€", excluding excise goods, in place since 1 July 2021 (EC VAT One Stop Shop portal).

If you sell to a consumer in the Netherlands, Germany or Sweden and the parcel ships from China, that is a distance sale of imported goods. With IOSS, you charge the customer's local VAT at checkout and pay it to one EU tax authority in a monthly IOSS return. The parcel then clears customs without import VAT, because the VAT was "collected upfront at the time the payment of the order is accepted", as the Commission's EUR 3 duty guidance puts it.

The VAT rate is that of the customer's country. Standard rates are 21% in the Netherlands and Belgium, 19% in Germany and 25% in Sweden (Your Europe, VAT rates).

IOSS is optional. Without it, VAT is collected on import, usually from your customer at the door. See our IOSS vs DDP vs DAP comparison.

What changed on 1 July 2026 with the EUR 150 duty exemption?

Before July 2026, goods in consignments up to EUR 150 paid VAT but no customs duty. Council Regulation (EU) 2026/382 of 11 February 2026 deleted that relief and put a temporary flat duty in its place, applicable from 1 July 2026 until 1 July 2028 (PwC Germany, 29 June 2026; KPMG).

After 1 July 2028, distance sales are meant to pay normal duty rates "irrespective of their value". The Commission must assess by 1 December 2027 whether the EU Customs Data Hub will be ready, and may propose extending the EUR 3 regime if it is not (Commission guidance, version of 5 October 2026).

Background: the Council's small parcels policy page.

How is the new EUR 3 duty calculated per parcel?

The regulation sets "a customs duty of EUR 3 per item in a consignment" worth no more than EUR 150 in total. An item is "one or more goods in a consignment sharing the same tariff classification, description and, where provided for, origin" (Commission guidance, section 5.2). Because of IT limits, customs charge it per declaration line, regardless of quantity on that line.

The Commission's own example: five T-shirts pay EUR 3, one T-shirt and one watch pay EUR 6 (DG TAXUD news, 8 June 2026). How finely goods are split depends on the declaration type: low-value H7 declarations use 6-digit HS codes, while a full H1 declaration uses 10-digit codes and can create more lines (EU Access2Markets, 30 June 2026).

What this means for your store:

  • A single-product order costs EUR 3 in duty.
  • A bundle of three different product types can cost EUR 9.
  • Alcohol, perfume and tobacco are now also covered.

Run your own numbers in the margin calculator before you change bundles.

Is there also a handling fee?

Yes, separately. The new Union Customs Code introduces a non-refundable Union handling fee per item for goods sold in distance sales. The Commission guidance states the amount is fixed at EUR 2 by a delegated act that was still "under scrutiny", and that the fee is "expected to apply from 1 November 2026" (Commission guidance).

It also applies above EUR 150 and, unlike the EUR 3 duty, is not temporary. Check the final act before pricing it in.

Who pays VAT and duty: me, my agent or my customer?

Legally, the debtor is the declarant: the person who lodges the customs declaration. The Commission sets a cascade for who that should be (Commission guidance, section 6.4):

  1. The IOSS holder, or its indirect representative.
  2. Without IOSS, the user of the "special arrangements" (usually the postal operator or courier).
  3. Otherwise an indirect representative of the importer.
  4. Only in residual cases, the consumer.

In practice:

  • With IOSS: you collect VAT at checkout and file it monthly. The carrier or customs agent pays the EUR 3 duty at the border and invoices it back to the IOSS holder. Your customer pays nothing at the door.
  • Without IOSS: the courier or post usually uses the special arrangements, collecting import VAT at the standard rate from your customer (Revenue Ireland). The EUR 3 duty still applies and normally lands on the same doorstep bill, often with a carrier fee on top.

Do I need my own IOSS number or can I use my supplier's?

IOSS registration belongs to the seller. A seller with no EU establishment must appoint an EU intermediary, "a taxable person established in the EU" (EC OSS portal, registration). Some agents ship under their own IOSS number. That only fits if they are the seller of record or your appointed representative.

On Shopify, IOSS registration "is required if you intend to charge VAT during the checkout process", and "using OSS and IOSS at the same time isn't supported" (Shopify Help, EU tax reference). That second point trips up Dutch and Belgian stores that are already on OSS. Get advice before you switch.

What happens to orders over EUR 150?

IOSS does not cover them. Import VAT and normal customs duty, at the product's tariff rate, are charged on import, usually to the customer via the carrier, unless you ship delivered duty paid. Shopify's help notes that "orders greater than €150 EUR have import VAT and duties applied" (Shopify Help). The expected EUR 2 handling fee would apply here too.

What should I check with my fulfillment partner this month?

  • Which declaration route your parcels take (IOSS, special arrangements or standard import), per carrier and per country.
  • Whose IOSS number is on the parcel, and whether that matches who the seller is.
  • The HS code for each product, because codes drive how many EUR 3 lines a bundle creates. Good sourcing includes getting these right.
  • Whether one order ever leaves in two parcels. Goods from one order dispatched separately are separate consignments (Commission guidance, section 5.1), so each pays its own duty.
  • How the duty and the coming handling fee appear on your invoices, so your fulfillment cost per order stays honest.

Transit times by country: China to Europe delivery times in 2026. Carrier options: our shipping service.

This is general information, not tax advice. Rules are still being implemented, so check the Commission's EUR 3 guidance and a tax adviser in your country before you change your setup.

Frequently asked questions

Is IOSS mandatory for dropshipping to the EU?

No. IOSS is optional. Without it, import VAT is collected when the parcel arrives, usually by the courier or post from your customer, often with a handling charge. That surprise bill causes refused parcels and chargebacks. With IOSS, you charge VAT at checkout and the customer pays nothing extra at the door. Since July 2026 the EUR 3 duty applies either way, so IOSS no longer decides whether duty is paid, only who pays it and when.

Can I use CJ's or my agent's IOSS number?

Only if they are acting as the seller or as your properly appointed representative. IOSS reports the seller's VAT on each sale. If you are the seller, a third party's number on your parcels does not report your VAT, and you need to know who is liable. Ask your agent in writing how their IOSS setup works for your store, and confirm with a tax adviser before relying on it.

Does the EUR 3 duty apply per item or per parcel?

Per item, where an item means goods sharing the same tariff classification and description. In practice customs charge per declaration line. Five identical T-shirts in one parcel pay EUR 3. A T-shirt and a watch pay EUR 6. A parcel with one product type pays EUR 3. Bundles with several different products pay EUR 3 for each distinct product type.

Who pays if a customer refuses a parcel at customs?

The declarant is the debtor for the duty. For returned low-value distance sales, the Commission guidance says operators can no longer ask to invalidate the declaration just because goods come back, so the EUR 3 is not refunded that way. General refund rules still apply. The coming EUR 2 handling fee is non-refundable. Build refusals into your margin.

Does IOSS apply to B2B orders?

No. IOSS and the EUR 3 duty are for distance sales to consumers, meaning buyers who are not VAT-registered businesses. Sales to EU businesses follow normal import rules: the importing business usually declares the goods, pays the duty at the normal tariff rate and handles import VAT in its own return. If you sell to both groups, keep B2B orders out of your IOSS flow.

Do I charge Dutch or German VAT to a German customer?

German. Under the EU e-commerce rules, distance sales are taxed where the customer receives the goods, so a German buyer pays 19% and a Swedish buyer 25%, even if your company is Dutch. Your checkout must apply the destination rate. Shopify does this once your IOSS or OSS registration is set up correctly.

What if one order ships in two parcels?

Each parcel is a separate consignment. It gets its own EUR 150 test and its own EUR 3 per item. Splitting a large order to stay under EUR 150 therefore adds duty lines and shipping costs rather than saving money. Where you can, ship one order as one parcel.

Work with Flashfulfil

Flashfulfil is a China-based fulfillment partner with its own office and warehouse in China, run by founders who ran their own dropshipping stores for years. We source products, store them, check quality, pick and pack, and ship worldwide through carrier partners, with 24h processing and 99.9% order accuracy. Pricing is quote-based. How your parcels are declared depends on your products and routes, so ask us and we confirm per product in your quote. Get in touch or test your numbers in the margin calculator.

Sources

All checked 16 October 2026.

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