Information about VAT & Duty

EORI stands for “Economic Operators Registration and Identification”.

Businesses, and in some cases individuals, wishing to trade across EU borders use the EORI number as an identification number in all customs procedures when exchanging information with Customs administrations.

Having a single type of identification number across the EU customs territory is more efficient, both for economic operators and customs authorities. It is also more efficient for statistical and security purposes.

The EORI number consists of two parts:

‒ the country code of the issuing Member State; followed by

‒ a code or number that is unique in the Member State.

Businesses, and in some cases individuals, established in the EU customs territory should apply for an EORI number with the customs authorities of the Member State in which they are established.

Businesses, and in some cases individuals, not established in the EU customs territory should apply for an EORI number with the customs authorities of the EU Member State responsible for the place where they first carry out their customs operations, such as lodging a customs declaration or applying for a customs decision. In addition, Registration rules and application procedures differ per Member State. Apply before starting customs activities, as registration can take several days.

The Harmonised System, or HS, is the international system for classifying goods. The first six digits are used internationally.

The EU extends this system with:

-an eight-digit Combined Nomenclature or CN code; and

-further TARIC subdivisions, commonly resulting in a ten-digit code for imports.

The correct code determines matters such as customs duty, restrictions and trade measures. The code depends on the goods’ material, function, composition and intended use. Businesses can consult the EU TARIC and CLASS databases for more information.

An overview of the HS nomenclature can be found on the website of the World Customs Organisation.

MRN is the abbreviation for “Master Reference Number”. In some customs systems and transit documentation, it is also referred to as a “Movement Reference Number”.

Both terms refer to a unique reference number assigned to a customs declaration or customs movement. The MRN allows customs authorities and businesses to identify and track an export or transit movement. It may also appear as a barcode on customs documents.

ICS2, or Import Control System 2, is the EU system for advance safety and security information. Carriers and other supply-chain parties submit an Entry Summary Declaration before goods arrive in or transit through the EU.

Complete and accurate product and party information is important. Missing or poor-quality data can lead to additional information requests, inspections or delays. ICS2 is fully operational for all modes of transport.

AES stands for “Automated Export System”.

AES is the EU’s electronic system for processing export and exit formalities. It exchanges information between businesses, the customs office of export and the customs office of exit. An exit confirmation can be issued after the goods leave the EU customs territory. Consult this link.

AES is the current system used under the Union Customs Code.

Customs duties are charges that may become payable when goods enter the EU and are released for free circulation. The amount normally depends on the commodity code, origin and customs value of the goods.

Other charges, such as excise duties, anti-dumping duties or customs-clearance fees, may also apply.

Since 1 July 2026, a temporary customs duty applies to e-commerce consignments with an intrinsic value not exceeding €150 that are sent directly to EU consumers. The duty is €3 for each different tariff category contained in the parcel. This temporary rule applies until 1 July 2028. It is separate from VAT.

For commercial goods, intrinsic value is generally the price of the goods themselves when sold for export to the EU. Separately stated transport and insurance costs, as well as taxes and duties, are normally excluded.

The €150 limit applies to the complete consignment sent by the same seller to the same customer under the same transport arrangement.

VAT is a national consumption tax. For a sale, VAT is generally calculated on the amount paid by the customer. The applicable rate depends on the country where VAT is due and on the type of product.

Import VAT is generally calculated on the customs value, plus customs duties, other taxes and certain costs such as transport, insurance and packaging.

EU VAT rates are published in the European Commission’s Taxes in Europe Database and can be found here.

DDP means “Delivered Duty Paid”, and DAP means “Delivered at Place”. Both are Incoterms that divide transport costs, risks and customs responsibilities between the seller and the buyer.

Under DAP, the seller arranges delivery to the agreed destination. The buyer normally handles import clearance and pays any import duties, import VAT and customs-clearance costs.

Under DDP, the seller normally handles both export and import clearance and bears the related duties and taxes. The seller must therefore be able to meet the customs and VAT requirements in the country of import.

Incoterms describe the contractual responsibilities of the seller and buyer. They do not override customs or tax law.

Every ten years, a new version of Incoterms is published to modernise the Incoterms. The latest version can be found here.

With direct representation, the customs representative submits the customs declaration in the name and on behalf of the customer. The customer is the declarant and is generally responsible for the customs debt.

With indirect representation, the customs representative submits the declaration in its own name but on behalf of the customer. Both the representative and the customer can then be jointly liable for the customs debt.

The customer must authorise the customs representative, normally through a power of attorney. Liability for import VAT and other national taxes may differ between EU Member States.

Contact your local account manager for the applicable authorisation form.

Since 1 July 2021:

-all commercial goods imported into the EU are, in principle, subject to VAT, including goods with a very low value;

-the previous national distance-selling thresholds are replaced by a single EU-wide threshold of €10,000 for qualifying intra-EU distance sales and certain digital services;

-the One Stop Shop, or OSS, allows qualifying VAT to be reported in one Member State;

-the Import One Stop Shop, or IOSS, applies to qualifying imported consignments not exceeding €150; and

-electronic interfaces can be treated as the supplier for VAT purposes in specific situations.

OSS and IOSS are optional schemes. If OSS is not used, the supplier or deemed supplier generally has to register for VAT in each Member State where VAT is due. If IOSS is not used, VAT is normally collected when the goods are imported or delivered. Depending on the sales and import arrangements, a local VAT registration may also be required.

The €10,000 threshold only applies where the supplier is established in one Member State. It is calculated without VAT and covers the current and previous calendar year.

The Union OSS is used for qualifying intra-EU distance sales of goods and certain B2C services for which VAT is due in another Member State.

The non-Union OSS is used by businesses that are not established in the EU for qualifying B2C services supplied in the EU.

The IOSS is used for qualifying distance sales of goods imported from outside the EU in consignments with an intrinsic value not exceeding €150.

These schemes are optional. A business can use more than one scheme when it carries out different types of transactions.

OSS and IOSS allow a business to report qualifying VAT through one Member State instead of registering in every country where that VAT is due.

Union and non-Union OSS returns are submitted quarterly. IOSS returns are submitted monthly. These returns are additional to any normal domestic VAT returns.

With IOSS, the customer normally pays VAT at checkout, which reduces the risk of unexpected VAT charges at delivery. Customs-clearance or other delivery fees may still apply.

OSS and IOSS are optional schemes.

Without OSS, a supplier or deemed supplier may need to register for VAT in each Member State where VAT is due. Without IOSS, VAT is normally collected at import, or the seller may need to use another VAT arrangement.

A business cannot always choose any Member State for registration. The correct Member State depends on where the business or its fixed establishment is located, where the goods are dispatched from and which scheme is used.

For IOSS, a supplier or deemed supplier that is not established in the EU generally has to appoint an EU-established intermediary. An intermediary is not required in certain cases, for example, where the supplier is established in a country that has an appropriate VAT mutual-assistance agreement with the EU and the relevant conditions are met.

The term “intermediary” applies only to IOSS.

An EU-established seller does not normally need an intermediary, although it may appoint one. A seller without an EU establishment generally needs an EU-established intermediary to use IOSS.

A limited exception applies when the seller is established in a country with an appropriate EU VAT mutual-assistance agreement and the goods are dispatched from that country. The intermediary registers the seller, submits the IOSS returns, pays the VAT and keeps the required records on the seller’s behalf.

No. IOSS does not apply to consignments with an intrinsic value above €150 or to goods subject to harmonised excise duty, such as alcohol and tobacco.

Other restrictions can also apply to products such as medicines, food, plants, animal products and controlled goods.

For EU countries, consult the European Commission’s Taxes in Europe Database, which can be found here.

For countries outside the EU, consult the relevant local tax authority. Commercial summaries (such as the one of PwC) can be useful, but rates and product classifications may change.

An electronic interface is a website, portal, marketplace, platform, application or similar system that connects sellers and buyers.

An electronic interface is treated as the supplier for VAT purposes only in specific cases, including:

-qualifying imported consignments not exceeding €150; and

-goods located in the EU that are sold to EU consumers by an underlying seller that is not established in the EU.

The platform must facilitate the sale. Merely advertising goods, processing a payment or redirecting a customer to another website is not always sufficient.

For commercial goods, intrinsic value is generally the price of the goods themselves when sold for export to the EU. Separately stated transport and insurance costs, as well as taxes and duties, are normally excluded.

The €150 limit applies to the complete consignment sent by the same seller to the same customer under the same transport arrangement.