VAT on Goods Entering the EU: What Non-EU Companies Must Know

If your company is based outside the European Union and exports goods to EU countries, it's essential to understand the VAT rules for non-EU companies.

Import VAT is a key part of EU customs compliance, and failing to meet the requirements can mean costly delays or penalties. Whether you're an e-commerce seller, a manufacturer, or a logistics intermediary, the points below will help you avoid surprises and operate more efficiently across borders.

Who pays VAT?

VAT is generally paid by the importer within the EU — whether the buyer is a final consumer or a business. There are notable exceptions:

• Imports through fiscal intermediaries or representatives;
• Goods exempted from VAT under Directive 2009/132/EC;
• Transactions under the Import One-Stop Shop (IOSS) regime;
• Reverse-charge mechanisms, depending on national legislation and EU VAT directives.

When is VAT due on imports?

As a rule, VAT becomes due the moment goods enter the customs territory of the EU — specifically, when they are cleared for free circulation. Two arrangements can defer that:

• Import VAT deferment regimes — account for import VAT on your periodic VAT return instead of paying it at customs, improving cash flow by avoiding an upfront payment;
• Temporary storage and customs warehousing — goods are stored under customs supervision without immediate VAT; it becomes due only once they're released into free circulation.

How is import VAT calculated?

The taxable amount is based on the customs value of the goods. This includes the price paid or payable, plus additional costs such as shipping, insurance, and any other charges up to the point of entry into the EU. Each Member State then applies its own VAT rate — typically between 17% and 25% — to that value.

The Import One-Stop Shop (IOSS)

The IOSS regime simplifies VAT compliance for B2C distance sales of goods under €150 from outside the EU. The seller collects VAT at the time of purchase and remits it monthly via a single EU registration; the goods are then exempt from VAT at customs. The advantages:

• Customers face no unexpected charges on delivery;
• Faster customs clearance;
• A single monthly VAT declaration for all EU sales.

Deferment regimes & customs warehousing

In some EU countries, businesses can defer import VAT by declaring it in their VAT return rather than paying at customs. This requires prior approval from the local tax authorities and is usually available only to EU-registered businesses.

Non-EU companies not using IOSS and selling into the EU — especially to consumers — may be required to appoint a fiscal representative in the country of import. That representative fulfils VAT obligations and may be jointly liable for unpaid taxes.

VAT compliance obligations for non-EU businesses

• Register for VAT in one or more EU Member States (if not using IOSS or holding inventory within the EU);
• Appoint a fiscal representative if required by local rules;
• Submit periodic VAT returns, usually monthly or quarterly;
• Issue compliant invoices and keep records for up to 10 years (in the case of IOSS).

Failing to comply can result in fines, interest and penalties — as well as logistical delays or even platform account suspensions.