If your Estonian company sells physical products online — a dropshipping store, a print-on-demand brand, any shop whose supplier posts orders from China, the UK or the US — you will eventually hit the question every e-commerce founder asks: who pays import VAT on low-value goods, and when? IOSS, the Import One-Stop Shop, is the EU’s answer.
This guide explains what the import scheme does, when an Estonian OÜ needs it, how IOSS registration works in Estonia and what the monthly IOSS VAT return looks like — no prior VAT experience assumed. It is written for founders who handle their own bookkeeping as well as those who use accounting services for Estonian companies and simply want to understand what their accountant is filing.
Quick answer
IOSS (Import One-Stop Shop) is the EU VAT scheme for distance sales of imported goods worth up to €150 shipped from outside the EU directly to EU consumers. An Estonian company obtains an IOSS number from the Estonian Tax and Customs Board (EMTA), charges the customer’s local VAT at checkout and reports all EU sales in a single monthly IOSS return. The parcel then clears customs with no import VAT charged to the buyer on delivery.
What Is the Import One-Stop Shop (IOSS)?
Every product entering the EU from a non-EU country is subject to import VAT. Before the import scheme existed, that VAT was collected at the border: the courier paid it, added a handling fee and asked the customer to settle up before handing over the parcel. Buyers hated the surprise charges and sellers hated the refused deliveries.
IOSS moves the VAT to the checkout. Your online shop charges it at the moment of sale, at the rate of the buyer’s country — 19% for a German customer, 21% for a Spanish one, 24% for an Estonian one. You pay all of it to EMTA in one monthly return, and EMTA passes each country its share. The parcel travels with your IOSS number, so customs releases it without collecting VAT again. The scheme is optional — but skipping it sends customers back to paying VAT and courier fees on arrival.
When Does an Estonian Company Need IOSS?
The import scheme applies when all of the following are true:
- You sell to private consumers (B2C), not to VAT-registered businesses.
- The goods are shipped from outside the EU to a customer inside the EU.
- Each consignment is worth €150 or less, excluding shipping and insurance.
- The goods are not subject to excise duty — alcohol and tobacco cannot go through IOSS.
If your stock is already inside the EU — in an Estonian warehouse, a Polish fulfilment centre or an Amazon facility in Germany — IOSS does not apply. Those are intra-EU distance sales and fall under the regular One-Stop Shop (OSS). The two schemes are easy to confuse, so here is the difference at a glance:
| IOSS | OSS | |
|---|---|---|
| Where the goods are when sold | Outside the EU | Inside the EU |
| Value limit per consignment | €150 | None |
| Return frequency | Monthly | Quarterly |
| Registration number | Separate IM number | Your Estonian VAT number |
There is one more exception. If you sell through a marketplace such as Amazon, eBay or Etsy, the platform is the “deemed supplier” for imported low-value goods: it charges the VAT under its own IOSS number. You only need an IOSS registration of your own for orders that come through your website. Our guide to selling on Amazon with an Estonian company covers the marketplace side in more detail.
How IOSS Works for Low-Value Goods: Step by Step
The life of a single cross-border order under the import scheme:
- A customer in France buys a €60 phone case from your online shop. Checkout applies French VAT of 20%, so the customer pays €72.
- Your supplier in Shenzhen ships the parcel. The label and customs declaration carry your IOSS number.
- Customs sees the number and releases the parcel with no VAT collected. The customer has nothing extra to pay.
- By the end of the following month you file one IOSS return with EMTA listing every EU sale by destination country and rate, and pay the total — including the €12 from the French order.
The critical step is the second one: your IOSS number must reach whoever prepares the customs declaration. Treat it as confidential — if it leaks, other people’s parcels can be cleared against your VAT account.
IOSS and Customs Duty: What Changed
IOSS handles VAT only. Customs duty is a separate tax, and the long-standing duty exemption for consignments up to €150 no longer applies: low-value parcels now attract a flat duty per line item even under IOSS. Most sellers build this small charge into the price or have the carrier prepay it. Confirm the current amount with your carrier, as EU customs rules for e-commerce are being reformed in stages.
IOSS Registration in Estonia: How to Get an IOSS Number
One prerequisite first: the company must already hold an Estonian VAT number. If it does not, that step comes before anything else. IOSS registration itself is done online in the EMTA e-services environment (e-MTA), in the section for special VAT schemes. A board member or authorised representative logs in with an ID card, e-Residency card or Smart-ID, selects the import scheme, confirms the company details and submits the application. EMTA issues an IOSS number in the format IM followed by ten digits — usually immediately — and the scheme applies from that day.
Because an Estonian company is established in the EU, it registers directly and needs no IOSS intermediary — the EU-based representative that non-EU sellers must appoint. That is a quiet but real advantage of running cross-border e-commerce through an Estonian OÜ rather than a UK or US entity.
The IOSS VAT Return: Monthly Filing and Record-Keeping
Once you hold an IOSS number, the reporting routine is fixed:
- One IOSS VAT return per month, due by the end of the following month — and a month with no sales still needs a nil return.
- One payment in euros to EMTA, covering VAT for every EU country you sold to.
- Records for ten years, showing destination country, VAT rate, value and date for every low-value sale.
Mistakes in a past month are corrected in a later return, not by resubmitting the original. Missing returns or late payments can lead to exclusion from the scheme, after which your parcels are taxed at the border again.
IOSS and the Estonian VAT Return (KMD)
IOSS does not replace your normal VAT reporting in Estonia — it runs alongside it. The monthly Estonian VAT return (KMD) still covers domestic and B2B activity; distance sales of imported goods go only in the IOSS return and never appear in the KMD. Your accountant therefore needs a clean split of IOSS orders from everything else, with the delivery country and VAT rate for each.
Two details catch beginners out. The IOSS return is always in euros, so sales in dollars or pounds are converted at the European Central Bank rate of the last day of the month. And the IOSS return has no input VAT line — the amount is paid in full, while VAT on your own purchases is still deducted through the KMD as usual.
Common IOSS Mistakes E-Commerce Sellers Make
- Applying Estonian VAT to every sale. IOSS requires the customer’s country rate, not 24%.
- Forgetting the number on the label. The buyer then pays VAT a second time at the door.
- Mixing IOSS, OSS and KMD. Amazon sales belong in the marketplace’s own return; goods shipped from an EU warehouse go in the OSS return; neither goes in the KMD.
Set Up Your Estonian E-Commerce Company With VAT Handled Properly
IOSS shows why Estonia suits cross-border online sellers: one digital registration, one monthly return, no intermediary. The catch is that EU VAT rules for e-commerce are unforgiving of small errors. Our team registers Estonian companies for international founders, handles VAT and IOSS registration with EMTA and acts as your accountant in Estonia so the monthly return is filed correctly and on time.
Frequently Asked Questions
No. If the goods are already inside the EU when sold, cross-border consumer sales go through the regular OSS scheme. IOSS is only for goods arriving from outside the EU.
They fall outside IOSS. Standard import VAT and duty are collected at the border, usually from the buyer.
The application is submitted online in e-MTA and the IM number is normally issued straight away, so an Estonian OÜ can start using the scheme the same day.
The rate of the country where the customer receives the goods. Your checkout must identify the delivery country and apply that country’s rate.
The IOSS return is filed in euros. Convert the month’s sales at the European Central Bank rate for the last day of that month, not at the rate on the day of each order.
