In December 2022, the European Commission unveiled the VAT in the Digital Age (ViDA) proposal, a wide-ranging reform to modernize VAT rules for the digital economy. ViDA introduces measures to simplify compliance, improve VAT collection and close loopholes in areas like e-commerce, online platforms and real-time reporting.

One key change in the proposal is the removal of the €150 threshold for using the Import One Stop Shop (IOSS) by 2028. But what does this mean for e-commerce businesses, logistics operators and customs brokers?

What is the €150 threshold?

When the IOSS was introduced in 2021, it allowed non-EU and EU-based sellers to collect VAT at the point of sale on low-value imports (up to €150) into the EU and report it via a single monthly return.
For shipments above €150, standard import VAT and customs duties still apply, with a more complex clearance process.

What was proposed?

Under ViDA, the European Commission plans to:
- Remove the €150 cap on IOSS eligibility.
- Allow EU-based sellers to use IOSS for all imports, regardless of value.

In other words, all goods sold to EU consumers could go through the same streamlined process, simplifying compliance and improving the customer experience.

Why is this happening?

The EU wants to:

• Level the playing field between EU-based and non-EU-based sellers.

• Encourage voluntary compliance by making it easier to collect VAT upfront.

• Improve VAT collection efficiency and reduce fraud.

What does it mean for businesses?

For e-commerce sellers:

- Easier VAT compliance across all price points.
- Reduced admin burden, only one VAT return.
- Better experience for customers (no surprise VAT on delivery).

For logistics providers and customs brokers:

- More shipments cleared through simplified, data-driven processes.
- Greater need to validate data quality before submission.

At the same time, non-compliance could carry more risks with the EU increasing audits and penalties.

A €2 handling fee on low-value goods: another change on the horizon

In addition to the ViDA reforms, the European Commission has proposed to allow Member States to introduce customs clearance fee of around €2 per low-value consignment, to help cover administrative costs of processing the high volume of e-commerce parcels.
The proposed €2 fee would help cover customs processing costs and could slightly impact final prices, even after the €150 threshold is removed.

Don’t Miss the Next Change

EU VAT and customs rules are evolving fast, with major changes like the removal of the €150 threshold and new handling fees on the horizon. Staying informed is key to staying competitive.

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