Last updated: September 15, 2026
If you’re a US or UK brand selling into Europe, here’s the short version. Every parcel you send into the EU is an import, which means import VAT (Value Added Tax, Europe’s sales tax, typically 19–27% depending on the country) and a customs process apply to it. For low-value consignments (those with an intrinsic value of €150 or less), you can register for IOSS (Import One-Stop Shop), charge VAT at checkout, and give your customer a clean, fee-free delivery through a single EU-wide VAT registration. Above €150, IOSS doesn’t apply and duties may enter the picture. The single biggest decision you’ll make isn’t a tax-form choice at all: it’s whether you pay the import charges up front (so nothing surprises your customer at the door) or your customer gets ambushed by a fee on delivery. Get that wrong and you’ll lose the sale after you’ve already paid to win it.
That’s the whole thing in a paragraph. The rest of this article explains each piece so you can decide what your setup should be.
Why selling into Europe is different from selling at home
When you sell domestically, tax is simple: you charge sales tax (US) or VAT (UK) and move on. Selling into the EU adds two things at the border. First, import VAT: the destination country wants its VAT on goods entering it. Second, customs clearance: every parcel is formally imported, with a declared value and commodity code, even if no duty is ultimately owed.
The mistake most new-to-Europe brands make is treating this as paperwork to sort out later. In reality it shapes your pricing, your checkout, and whether customers ever order from you again. So it’s worth deciding deliberately rather than discovering it parcel by parcel.
What IOSS actually is (and when it helps)
IOSS is an EU scheme that lets you collect VAT at the point of sale on imported parcels valued at €150 or under, then remit it through one monthly return covering all 27 EU countries, rather than registering separately in each. For a brand shipping lots of small orders into Europe, it’s the difference between one tidy registration and a bureaucratic mess.
The practical payoff for your customer: the VAT is already paid at checkout, so the parcel moves through customs without them being asked for anything. No doorstep charge, no “your parcel is held, pay €14 to release it” email. That’s the experience you want.
Two honest caveats.
- IOSS only covers consignments of €150 or less. Sell higher-value items and you’re outside it.
- And IOSS handles VAT, not customs duty; most goods under €150 attract no duty, but “most” isn’t “all”, so it depends on what you sell.
The decision that actually matters: DDP vs DAP
This is the one to get right. DDP (Delivered Duty Paid) means you, the seller, pay the import VAT and any duties before the parcel reaches the customer. DAP (Delivered At Place) means the customer is liable, and often gets a demand for payment from the carrier before they can receive their own order.
- DAP is a conversion killer. Picture a customer in Germany who bought a €90 item from your US site, then gets a text asking for €20 before the courier will hand it over. Some pay it, resent you, and never reorder. Many refuse, the parcel returns, and you’ve paid shipping both ways for nothing. DDP costs you more per order up front, but it protects the experience you spent money to create.
Here’s the honest trade-off, laid out:
| DDP (you pay at source) | DAP (customer pays at door) | |
|---|---|---|
| Customer experience | Clean, no surprise fees | Poor, possible ambush charge |
| Your cost per order | Higher up front | Lower up front |
| Conversion / repeat rate | Protected | At risk |
| Best for | Consumer brands, D2C | Rare cases; B2B where the buyer expects it |
For almost any brand selling direct to consumers, DDP is the right default. The up-front cost is real, but it’s cheaper than losing the customer.
Should you hold stock inside Europe, or ship each order across the border?
There are two broad models.
- Ship cross-border: every order leaves your home country and imports individually. Simple to start, but each parcel is a separate customs event, and delivery is slower and pricier.
- Hold stock in Europe: you send inventory into an EU fulfilment location once, clearing customs in bulk, then ship domestically to customers. That’s faster, cheaper per order, and often a better returns experience.
The trade-off is volume. Holding EU stock adds complexity (and can trigger local VAT obligations in the country where the stock sits), so it tends to pay off once your European order volume is steady rather than occasional. Below that, cross-border with a clean DDP setup is usually the sensible starting point.
This is exactly the kind of decision worth modelling against your real numbers rather than guessing. The crossover point depends on your order volume, item value and target markets.
Frequently asked questions
Do I need to charge EU VAT if I’m based in the US or UK?
If you’re selling to EU consumers and importing goods to them, VAT applies on import. IOSS lets you collect it at checkout for parcels €150 or under; above that, VAT is handled at the border. Either way the VAT is owed. The question is who pays it and when.
Is IOSS mandatory?
No. It’s an optional simplification. Without it, VAT is still due. It’s just collected at the border, which usually means your customer faces a fee unless you’ve arranged to cover it. For most brands shipping small parcels, IOSS is worth having.
What happens above €150?
IOSS doesn’t apply. The consignment goes through standard import procedures, and customs duty may apply depending on the product and its origin. You can still ship DDP so the customer isn’t charged. The mechanics behind the scenes just differ.
Will my customer ever get a surprise fee?
Only if you ship DAP (customer liable) or don’t have VAT handled up front. Ship DDP with VAT collected at checkout and the parcel should reach them with nothing more to pay.
Do I have to register for VAT in every EU country?
Not for imports covered by IOSS. That’s the whole point of it. You may need local VAT registration if you physically hold stock inside an EU country, which is a separate consideration from IOSS.
Where this leaves you
Selling into Europe isn’t as forbidding as the acronyms make it look. For most US and UK brands the sensible starting shape is: register for IOSS if you ship parcels €150 or under, ship DDP so customers never meet a surprise fee, and revisit holding stock inside Europe once your volume justifies it. The details (which markets, which VAT rates, when the stock-holding maths flips) depend on your specifics.
Apply to speak to our team and we’ll give you an honest assessment of what your setup should look like, including where you’d save and where you wouldn’t.