Working Party on Tax Questions debates Import One Stop Shop (IOSS) in Conjunction with the 2028 EU Customs Reforms
On 27 March, the Council of the European Union’s Working Party on Tax Questions will meet again to continue the exchange of views on Import One-Stop Shop reforms. This supports March’s ECOFIN meeting which is reviewing progress on the file.
This is one of the three major reforms as part of the 2028 EU Customs reforms
The Party will discuss three points. It is hoped that changes can be announced within the current Polish presidency of the EU Presidency which is focused on the other Customs reforms first.
1. Enhancing the Robustness of the IOSS & Mandatory Use
The Import One Stop Shop (IOSS) was introduced in July 2021 under the EU VAT e-commerce package to simplify VAT compliance for distance sales of imported goods valued below €150. It allows non-EU sellers and marketplaces to collect, declare, and remit VAT at the point of sale, eliminating the need for buyers to pay VAT upon import.
However, challenges such as fraudulent IOSS registrations, incorrect VAT declarations, and undervaluation of goodshave raised concerns. As part of the 2028 EU Customs Reform proposals, the European Commission is evaluating whether IOSS should be mandatory for all e-commerce imports, ensuring uniform application of VAT and reducing abuse of the low-value exemption. This shift would require stricter customs-to-tax authority data sharing, enhancing automated risk analysis and compliance checks.
2. Directive on VAT for Distance Sales & Import VAT
The EU VAT Directive (Council Directive 2006/112/EC) governs the taxation of cross-border e-commerce. Under current rules, sellers using IOSS charge VAT at the rate applicable in the customer’s country, simplifying compliance. However, enforcement remains fragmented, with issues such as:
• Misuse of third-country intermediaries to avoid VAT obligations.
• Inconsistent VAT rate application due to differing national interpretations.
• Limited tracking of IOSS-registered entities, leading to VAT leakage.
To address these, the EU proposes harmonized electronic VAT reporting, enhanced customs controls, and a centralized database tracking IOSS transactions. This aligns with the 2028 Customs reform’s single-entry point system, where pre-declared customs data will be cross-verified with VAT filings to detect anomalies in real-time.
3. Exchange of Views on “Incentivising” IOSS
To increase IOSS adoption, the EU is discussing incentives such as:
• Streamlined customs clearance for IOSS shipments, reducing delays.
• Reduced compliance burdens for businesses that voluntarily adopt IOSS.
• Stricter penalties for non-compliance, discouraging VAT evasion.
Additionally, a trusted trader framework could be introduced, allowing verified IOSS users to benefit from priority customs processing. This complements the EU Customs Data Hub, proposed for 2028, which aims to centralize all customs, VAT, and trade data, increasing efficiency.
