Selling to the EU? Here’s how ViDA and IOSS impact your VAT obligations

On 13 May 2025, the European Commission approved new measures under the VAT in the Digital Age (ViDA) initiative. These changes take effect from 1 July 2028 and will significantly affect how non-EU businesses sell goods into the EU, particularly via the ever-growing online marketplaces in the region.

Here’s a breakdown of what’s been in place since IOSS was introduced on 1 July 2021, what’s changing, and how to stay compliant.

What’s already in place?

• IOSS (Import One-Stop Shop) was introduced. Registering for IOSS allows non-EU sellers to declare and remit VAT on consignments valued at €150 or less through a single EU registration.
• €22 VAT exemption removed: All imported goods are now subject to VAT.
• Special arrangement scheme: Postal operators could collect VAT on delivery if IOSS wasn’t used.
• Marketplaces as ‘Deemed Suppliers‘: Online platforms became liable for VAT on certain cross-border sales.

The 6 things changing with ViDA for non-EU sellers from 2028

In March 2025, the ViDA package was published in the Official Journal of the EU to modernise the EU’s VAT systems – bringing them in line with modern technology, the platform economy, and combating tax fraud.

Its official implementation started on 14 April 2025, and the timeline for the rollout extends into the 2030s.

• Special arrangement abolished: VAT must be paid by the seller or platform at the point of sale.
• Mandatory IOSS or multi-country VAT registration: Non-EU sellers must use IOSS or register in each EU country where goods are delivered.
• Supplier as Importer of Record (IOR): Sellers not using IOSS are liable for VAT at import, and buyers can no longer be listed as IOR.
• Tax representative requirement: Non-EU sellers from outside cooperating countries must appoint an EU tax representative such as AVASK.
• Joint and several liability: Customs agents and intermediaries may share VAT liability.
• €150 threshold removal (proposed): IOSS could apply to all goods, not just those under €150.

Learn more about the future of e-invoicing in the EU

DAC7, ViDA and IOSS – why they’re so important

Firstly, what’s DAC7?

DAC7 is the EU Directive on Administrative Cooperation (Council Directive (EU) 2021/514) came into force on 1 January 2023. It introduces new tax transparency rules specifically targeting digital platforms.

What DAC7 does and why it matters

• Requires digital platform operators (like Amazon, eBay, Airbnb) to collect and report information about sellers using their platforms – such as the seller’s identity, tax residency, income earned, and the type of activity (e.g. sale of goods, rental of property, provision of services)
• Applies to both EU and non-EU platforms that facilitate commercial activity within the EU
• The first exchange of information between EU tax authorities under DAC7 took place in February 2024

DAC7 aims to combat tax evasion and fraud by ensuring that tax authorities have access to accurate, cross-border data on digital commerce. It increases transparency, strengthens compliance, and helps ensure a level playing field for all sellers.

How is DAC7 enforced, and how does it impact non-EU sellers?

As of 2024, the directive is enforced by

• Mandatory platform reporting: Marketplaces must report seller identity, revenue, and residency
• Prevention of undervaluation: Sales data will be matched with import declarations to detect misreporting
• Increased platform liability: Marketplaces must monitor seller compliance or face VAT risks
• Greater transparency: Customs and tax systems will integrate DAC7 data to identify fraud

How does DAC7 fit in with ViDA and IOSS, and what are the combined effects?

DAC7, ViDA, and IOSS are interconnected EU initiatives designed to modernise VAT compliance in the digital economy.:

• IOSS simplifies VAT collection for non-EU sellers on low-value goods
• ViDA expands these obligations by proposing the removal of the €150 threshold and requiring VAT to be paid at the point of sale
• DAC7 supports enforcement by mandating that digital platforms report detailed seller data to tax authorities, enabling them to detect fraud and ensure compliance

Together, these measures shift VAT responsibility away from consumers and onto sellers and platforms, increasing transparency, reducing evasion, and levelling the playing field across the EU market. Which means:

• VAT liability is shifting permanently to sellers or platforms, so customers are no longer fallback payers
• Customs authorities can cross-check marketplace data to detect undervaluation
• Customs scrutiny will increase due to the integration of sales and import data
• Non-EU sellers face growing pressure to adopt IOSS and ensure full compliance

⚠️ What should non-EU sellers do now to be compliant?

If you’re selling direct, you’ll need to:

• Register for IOSS (until the €150 limit is lifted)
• Appoint an EU tax representative if required
• Ensure accurate customs values

If you’re using a marketplace, you’ll need to:

• Confirm the platform applies IOSS correctly
• Submit complete and accurate transaction data
• Monitor DAC7 obligations and platform compliance rules

Key takeaways about ViDA and IOSS for non-EU sellers

• IOSS remains essential: Non-EU sellers must use the Import One-Stop Shop (IOSS) for consignments up to €150 or register for VAT in each EU country.
• Special arrangement abolished: From July 2028, sellers or platforms must pay VAT at the point of sale—customers can no longer be made liable.
• Import undervaluation crackdown: DAC7 enables tax authorities to match sales and import data, increasing scrutiny and reducing fraud.
• Tax representative required: Non-EU sellers from non-cooperating countries (e.g. the US) must appoint an EU-based tax representative.
• Marketplaces under pressure: Platforms must report seller data and ensure compliance or face VAT liability.

How can these changes help your business grow?

From July 2028, VAT will be collected at the point of sale, reducing surprises for customers and improving trust. IOSS or a single EU tax representative streamlines compliance, while DAC7 ensures a level playing field by holding all sellers and platforms to the same standards.

These changes mean fewer barriers, more transparency, and a fairer, more efficient system for growing your business in the EU market.