Dropshipping is one of the most popular online commerce models — you sell goods without keeping them in stock, and the supplier ships them directly to the customer. Convenient, but with the new VAT rules in e-commerce come issues that many merchants underestimate.
In this manual, an accounting firm Rodi Consult (Varna) explains dropshipping taxation — the IOSS and OSS regimes and who owes VAT — updated for 2026.
In short: When dropshipping goods from third countries to customers in the EU, the new e-commerce rules apply. If you sell through a platform (Amazon, eBay) for shipments up to 150 euros, the platform charges VAT, and you invoice it with 0%. For goods from a warehouse in the EU, the OSS regime applies. The threshold of 22 euros excluding VAT no longer exists.
What is dropshipping?
In dropshipping, the online store accepts orders for goods that it does not physically have. Three parties are involved in the transaction:
- Major wholesale supplier — usually abroad, produces or stores the goods;
- Merchant (online store) — sells through a platform (Amazon, eBay, Etsy) or its own website;
- End customer — most often an individual.
The customer orders and pays the merchant; the merchant forwards the order to the supplier; the supplier ships the goods directly to the customer.
VAT on dropshipping — the new rules
New VAT rules for online commerce came into effect on July 1, 2021. The regime is key IOSS (Import One Stop Shop, import regime) — for goods imported from a non-EU country and sold to end customers in the EU. VAT is collected at the time of order, not at customs. Important: dropped out the relief is that goods up to 22 euros are VAT-free.
IOSS applies when the following conditions are simultaneously met: the goods are imported from a third country; they are shipped from a third country at the time of sale; the shipment is to 150 euros; sent by the supplier; are not excisable goods; the customer is a non-taxable person.
Selling through a platform (Amazon, eBay, Etsy)
The new rules have introduced a major relief here. For goods up to 150 euros imported from third countries and sold to individuals in the EU via a platform, there are two deals:
- Trader → platform — issue an invoice to the platform with 0% VAT (Art. 35a of the VAT Act);
- Platform → client — the platform is an assimilated supplier (Art. 14a, para. 6) and charges VAT at the rate of the customer's country.
So if you're selling through a big platform, You usually do not need IOSS registration. — You invoice the platform, not the end customers.
Shipments over 150 euros and sales through your own website
For shipments over 150 euros the platform is not an equal supplier. You have two options: to register under IOSS (only applies to shipments up to 150 euros) or not to register — then the customer pays VAT and import duty. The same applies to sales through own website — for goods from third countries, the delivery has a place of performance outside the country and is not taxable.
Goods in EU warehouse → OSS mode
A common hypothesis: you sell through Amazon, but the goods are in their warehouse in the EU (e.g. Germany). Then IOSS is not applicable (the goods do not originate from a third country) — this is intra-Community distance selling and falls into mode OSS ("in the Union"). You charge VAT at the rate of each country you sell to by registering under OSS instead of separately in each country. See the article to find out if you are required to register at all When is VAT registration mandatory?.
FAQ
Do I have to pay VAT when dropshipping?
It depends on the model. When selling goods imported from third countries to end customers in the EU, the new e-commerce rules apply. If you sell through a large platform (Amazon, eBay), usually the platform is responsible for VAT, and you invoice it with 0% VAT.
What is the IOSS ("import") regime?
IOSS (Import One Stop Shop) is a VAT declaration regime for imports of consignments worth up to 150 euros from third countries, sold to end customers in the EU. VAT is collected at the time of order, not at customs, which saves the customer unexpected fees.
Do I need to register with IOSS if I sell through Amazon or eBay?
Usually not. For shipments up to 150 euros, the platform is considered an equivalent supplier (Art. 14a of the VAT Act) and charges VAT. You issue an invoice to the platform with 0% VAT (Art. 35a), so your own registration under IOSS is not required.
What happens with shipments over 150 euros?
Then the platform is not considered a supplier. You have two options: register under IOSS (only applies to shipments up to 150 euros) or not register — in which case the standard import rules apply and the end customer pays VAT and customs duties.
What if the item is in an Amazon warehouse in the EU?
Then IOSS is not applicable because the goods are not shipped from a third party. This is an intra-Community distance sale and falls under the OSS („in the Union“) regime – you charge VAT at the rate of the customer’s country by registering under OSS instead of in each country separately.
The conclusion
Dropshipping is an affordable model, but the VAT treatment depends on where the goods are coming from, what the value of the shipment is, and whether you are selling through a platform or your own website. A mistake in the regime (IOSS vs. OSS) leads to fines and double taxation.
Do you do dropshipping or online trading? Explore Rodi Consult accounting services or is contact us — we will assess the correct VAT regime for your model. Phone: +359 893 474 576.
This article is for informational purposes only and does not constitute tax advice. Please consult an accountant for your specific situation.
