A business selling goods or digital services to consumers across the European Union meets a VAT problem that a business selling within one country never does: in principle, VAT is due where the customer is, which could mean registering, charging and filing in every member state it sells into. The One Stop Shop exists to make that manageable, and understanding it is now essential for any e-commerce operation reaching European consumers, whether the seller sits inside the Union or outside it.
The principle: VAT follows the consumer
For cross-border sales to consumers, the destination principle broadly applies: the VAT belongs to the country where the customer is, at that country’s rate. Without a simplification, a seller shipping to consumers in fifteen member states would face fifteen VAT registrations and fifteen returns. The One Stop Shop replaces that with a single registration and a single return, through which the seller declares and pays the VAT due across all member states, which the system then distributes.
That principle rests on specific provisions of the consolidated VAT Directive. Article 33, point (a), places an intra-Community distance sale where transport to the customer ends, and Article 58 places telecommunications, broadcasting and electronically supplied services where the private customer belongs. Article 14(4) defines an intra-Community distance sale to include supplies where the seller merely intervenes indirectly in the dispatch, which catches the seller who nominates a carrier without contracting it. New means of transport and goods installed by the supplier are carved out, and Article 35 keeps second-hand goods, works of art, collectors’ items and antiques sold under a margin scheme outside the rule entirely.
The threshold that catches small sellers
There is a modest Union-wide threshold below which a small seller may continue to charge its home-country VAT on cross-border consumer sales. Above it, the destination principle applies in full and the One Stop Shop becomes the practical route. The threshold is low enough that any growing e-commerce business crosses it quickly, and a seller that has crossed it without registering is accumulating a liability in every country it ships to.
The figure is EUR 10 000 exclusive of VAT, and it is set by Article 59c of the VAT Directive. Two features of it are routinely misread. It is one Union-wide figure rather than a figure per country, so sales to consumers in Germany, Belgium and Spain are added together instead of being measured against three separate allowances. And it mixes categories: intra-Community distance sales of goods and telecommunications, broadcasting and electronic services count towards the same total, a point the Dutch tax administration states in terms for sellers who assume their digital revenue sits in a separate bucket.
Article 59c also carries conditions that are easy to lose. The threshold is available only to a supplier established, or in the absence of an establishment resident, in a single member state, so a business with a fixed establishment in a second member state charges destination VAT on everything from the outset; the Dutch guidance adds that a warehouse abroad, on its own, is not a fixed establishment. The test looks at the current calendar year and the preceding one, and where the figure is passed mid-year the destination rule applies from that supply onwards, not from the following January.
Coming back under the threshold is slower than crossing it: the Dutch administration allows home-country VAT again only from 1 January after a full calendar year at or below EUR 10 000. A seller may also give the threshold up and tax at destination from the start, a choice which Article 59c(3) says must in any event cover two calendar years, notified in the Netherlands on a dedicated form. Separately, a business whose Union-wide annual turnover stays under EUR 100 000 may qualify, in member states that operate a small business exemption and where it also respects that country’s own threshold, for the cross-border exemption in Article 284, which removes the VAT rather than relocating it.
The One Stop Shop does not remove the VAT. It removes the fifteen registrations. The obligation to account for the right VAT in the right country remains, in one return instead of many.
Goods, services and the schemes
The system has strands. One covers intra-Union distance sales of goods and certain services to consumers. Another, the import scheme, covers low-value goods imported from outside the Union and sold to Union consumers, allowing the VAT to be collected at the point of sale rather than at the border. For a business importing goods to fulfil European orders, the import strand interacts with customs and with the point-of-entry decisions we describe in our note on Asia-Europe supply chain restructuring.
Those strands are three separate schemes with three different populations, and treating them as interchangeable produces the wrong answer. The non-Union scheme, Articles 358a to 369, is for a taxable person with neither a business establishment nor a fixed establishment anywhere in the Community. It covers services only, but all of them, supplied to non-taxable persons anywhere in the Union, including services taking place in the member state the trader picked for identification. That pick is free, since any member state will do, and it produces a dedicated number in the EUxxxyyyyyz format usable for nothing else.
The Union scheme, Articles 369a to 369k, has three populations and only one of them must be established in the Union. Anyone carrying out intra-Community distance sales of goods may use it, including a non-EU seller shipping from stock held in a member state. An electronic interface may use it for supplies it is deemed to make where dispatch begins and ends in the same country. Services, however, are reserved to a taxable person established in the Community but not in the member state of consumption, and Article 57c of Implementing Regulation (EU) No 282/2011 pushes services supplied in a country where the trader is established back into that country’s ordinary return.
Imports, the EUR 150 line and the end of the low value exemption
Until 1 July 2021 a small consignment entered the Union free of VAT. Title IV of Directive 2009/132/EC exempted imports of a total value not exceeding EUR 10 and allowed member states to extend the exemption to EUR 22, which most of them did. Article 3 of Directive (EU) 2017/2455 deleted that title outright, and Council Decision (EU) 2020/1109 pushed the start back six months to 1 July 2021 because of the pandemic. Every commercial consignment entering the Union now carries VAT, whatever it cost.
The import scheme replaces collection at the border with collection at checkout, and Article 369l fixes its perimeter precisely: goods only, excise products excluded, in consignments of an intrinsic value not exceeding EUR 150. That value is a customs concept, defined for commercial goods in Article 1(48) of Delegated Regulation (EU) 2015/2446 as the price of the goods themselves, excluding transport and insurance unless those are inside the price and not shown separately on the invoice, and excluding any other taxes and charges the customs authorities can ascertain from the relevant documents. Under Article 369n the supply is treated as made when payment is accepted, which in practice means the authorisation message rather than the settlement date, and the Dutch guidance on the import scheme treats one consignment as what travels under one transport document.
Above EUR 150, or for excise goods, the import scheme is simply unavailable and the consignment clears customs in the ordinary way, with import VAT and any duty payable then. Where the value is under EUR 150 and the scheme is not used, Articles 369y to 369zb offer the fallback that postal and express operators use at scale: whoever presents the goods to customs collects the VAT from the consignee and declares it monthly, and the member state may apply its standard rate to the whole consignment. Where the scheme is used, Article 143(1)(ca) exempts the importation provided the import scheme number reaches customs at the latest when the import declaration is lodged, and Article 47h of Regulation (EU) No 904/2010 requires that number to be verified electronically at that moment. That exemption has always been from VAT alone, and it is below the line that the customs duty relief has now gone: Council Regulation (EU) 2026/382 deleted the threshold-based relief and, from 1 July 2026 until 1 July 2028, a deadline that Article 3 requires the Commission to review by 1 December 2027 and, where appropriate, to propose extending if the centralised Union customs IT infrastructure will not be operational in time, imposes a customs duty of EUR 3 per item in a consignment of an intrinsic value not exceeding a total of EUR 150 where the importation is exempt under Article 143(1)(ca) or the goods are in a postal consignment as defined in Article 1(24) of the Delegated Regulation. That second limb stopped meaning the post on the day the duty started: Delegated Regulation (EU) 2026/1022, applicable from 1 July 2026 as well, rewrote Article 1(24) as goods in a consignment of not more than EUR 150 sold in a distance sale of imported goods, excluding those already exempt under Article 143(1)(ca) and goods benefiting from preferential measures, so the two limbs together now reach almost every consumer sale below the line, inside the import scheme or outside it and carried by courier as readily as by post. Item is a defined term too, in Article 1(61) of Delegated Regulation (EU) 2015/2446 as it now stands: one or more goods in the consignment sharing the same tariff classification, description and origin. Five identical shirts of EUR 20 are one item and carry EUR 3 rather than EUR 15, five different goods are five items, and identical goods declared on five separate lines are charged line by line, so the figure the checkout price has to cover follows the declaration and not the count of things in the box.
Registering, declaring, paying and reclaiming
Registration is a notification rather than an application, and its timing matters. Under Article 57d of the Implementing Regulation the Union and non-Union schemes apply from the first day of the following calendar quarter, unless the first supply happens earlier and the trader notifies by the tenth day of the month after that supply, in which case the scheme runs from that first supply. The import scheme starts only on the day the individual number is allocated, so a business that ships before the number arrives has imports outside the scheme and must clear them the ordinary way.
The return is quarterly for the Union and non-Union schemes and monthly for the import scheme, and in each case it falls due by the end of the month following the period. A nil return is compulsory when nothing was sold, and the Dutch administration adds that a return may not be filed before the period has ended. Corrections are never made by reopening a filed return: Article 61 of the Implementing Regulation requires them to go into a later return, within three years of the date the original was due, after which the trader deals directly with each member state of consumption.
Payment goes to the member state of identification in a single transfer, quoted against the unique reference number of that specific return, and Article 62 forbids reallocating a payment to another period. That state then splits it. Article 47d of Regulation (EU) No 904/2010 gives it twenty days from the end of the month of receipt to forward the return data to each member state of consumption, and Article 47f the same twenty days to transfer the money, keeping nothing: the retention the earlier regime permitted fell to zero from 1 January 2019. An underpayment is apportioned pro rata, so one shortfall becomes a shortfall in every country at once.
The part that catches businesses is the deduction. Articles 368, 369j and 369w say plainly that VAT incurred in a member state of consumption cannot be deducted in the scheme return, which reports output VAT and nothing else. The trader recovers it instead through the refund procedure of Directive 2008/9/EC, or Directive 86/560/EEC for a non-EU trader, unless it happens to hold an ordinary VAT registration in that country, in which case the input tax belongs in that domestic return. A business that has netted its Italian or Spanish purchase VAT against its scheme liability has underdeclared in those countries and recovered nothing anywhere.
Marketplaces as deemed suppliers
A significant shift made online marketplaces responsible, in defined cases, for the VAT on sales made through them, treating the marketplace as if it had bought and resold the goods. A seller operating through a marketplace has to understand where that deemed-supplier rule places the VAT obligation, because assuming the marketplace handles everything, or assuming it handles nothing, are both ways to get it wrong.
Article 14a draws the line in two places. A platform facilitating distance sales of goods imported in consignments of an intrinsic value not exceeding EUR 150 is deemed to have received and supplied them, whoever the underlying seller is. A platform facilitating a supply of goods inside the Community by a seller not established in the Community is deemed supplier too, and there the value is irrelevant: a single item shipped from a warehouse in the buyer’s own country is caught, as the Dutch tax administration sets out in its guidance on the platform fiction. Directive (EU) 2019/1995 ascribed the transport to the platform’s supply in Article 36b, made both supplies chargeable when payment is accepted in Article 66a and exempted the seller’s supply in Article 136a. Directive (EU) 2025/516 widens the second limb from 1 January 2027 to supplies to a taxable person or non-taxable legal person whose intra-Community acquisitions are not subject to VAT.
The non-EU seller
A seller established outside the Union selling to Union consumers is fully within these rules and often needs to appoint an intermediary to use the import scheme. This is where a European establishment, a Dutch entity acting as the European importer and seller, frequently simplifies the position, giving the business a Union presence through which to manage VAT, customs and fulfilment coherently rather than as a non-resident navigating each border. The structural side connects to our note on Dutch VAT for international holding companies.
The intermediary requirement is narrower than it is usually described. Article 369m lets a taxable person established in the Community use the import scheme alone, requires an intermediary established in the Community for anyone else, and exempts a taxable person established in a third country with which the Union has a mutual assistance agreement comparable to Directive 2010/24/EU and Regulation (EU) No 904/2010, for distance sales from that country. Norway is the case in point, and the Commission works the example through: goods leaving Norway need no intermediary, while the same seller’s goods leaving China do, and a seller shipping from both needs one.
Getting it right is now operational, not annual
VAT for e-commerce is not a year-end calculation; it is a live operational discipline built into the checkout, the fulfilment and the reporting. A business that treats it as an afterthought accumulates liabilities silently across a dozen jurisdictions, and the One Stop Shop only helps a business that has actually registered for it and accounts correctly through it. For a scaling e-commerce operation, getting the VAT architecture right early is far cheaper than unwinding a multi-country exposure later.
The record obligation is the longest in the system. Articles 369, 369k and 369x require the underlying records to be kept for ten years from the end of the year of the transaction, which the Dutch tax administration points out is three years beyond the ordinary Dutch retention period of seven. Article 63c of the Implementing Regulation lists what they must contain, item by item, and the list runs to twelve: the member state of consumption, the type of services or the description and quantity of goods supplied, the date of the supply, the taxable amount and its currency, any later increase or reduction, the rate, the VAT payable and its currency, the dates and amounts of payments received, any payments on account received before the supply, the information contained on the invoice where an invoice is issued, the evidence used to locate the customer or to fix where transport began and ended, and proof of any returned goods. The import scheme has its own list of thirteen in the same article, which adds the order number or unique transaction number and, where that taxable person is directly involved in the delivery, the unique consignment number.
Those records must be produced electronically on request, routed through the member state of identification, and the Commission publishes a standard audit file that every member state accepts. The sanctions are structural rather than monetary. Article 58b of the Implementing Regulation treats three consecutive periods in which a reminder was issued and the return still not filed within ten days, or three consecutive periods in which the VAT went unpaid ten days after a reminder unless the balance was under EUR 100 for each period, or a failure to produce records a month after a reminder, as persistent non-compliance, and the consequence is exclusion from every special scheme in every member state for two years. Interest and penalties are separately assessed and collected by each member state of consumption under Article 63b, so one missed filing produces consequences country by country.
Montclare builds and operates European structures with the substance and documentation that these rules require. Our services are set out on our services page.
This article is informational and does not constitute tax or legal advice. Rules of this kind evolve and their application depends on the facts of each structure. Each engagement is subject to scope and applicable regulation.