The EU has spent two years dismantling the low-value import rules that small UK sellers relied on. The €22 VAT exemption went in 2021, IOSS arrived in its place, and on 1 July 2026 the €150 customs duty exemption followed. This guide puts the pieces in order for a seller shipping from Great Britain (the rules for Northern Ireland are different) to consumers in the EU: what is charged, who collects it, and how to set up Etsy and Shopify so the buyer is not surprised at the door.
What a parcel to the EU is charged in 2026
| Charge | Applies to | Rate | Who collects |
|---|---|---|---|
| Import VAT | Every consignment, any value | The destination country’s VAT rate on goods plus shipping | You at checkout via IOSS (up to €150), or the carrier from the buyer |
| Customs duty, flat | Distance sales up to €150 intrinsic value | €3 per item type in the consignment, 1 July 2026 to 1 July 2028 | The carrier, from you (DDP) or the buyer (DAP) |
| Customs duty, standard | Consignments over €150 | The tariff rate for the product; 0% for goods of UK preferential origin with a statement on origin | The carrier, from you or the buyer |
| Clearance or handling fee | Any parcel where the carrier collects charges on delivery | Typically €5 to €15, set by the carrier | The buyer, on delivery |
Three details matter. The €150 line is the intrinsic value of the goods, excluding shipping and insurance shown separately. The €3 is per item type, not per unit: two identical mugs are one tariff line and one €3; a mug and a T-shirt are two lines and €6. And the flat duty applies regardless of which VAT route you use, IOSS or not.
VAT rates you will meet most often: Germany 19%, France 20%, Netherlands 21%, Belgium 21%, Spain 21%, Italy 22%, Ireland 23%, Sweden 25%. IOSS applies the rate of the buyer’s country automatically; the calculator below does the same.
IOSS: collecting the VAT at your checkout
The Import One-Stop Shop is an EU VAT registration that lets a non-EU seller charge the buyer’s country VAT at checkout on consignments up to €150, declare it on one monthly return and pay it in one place. The parcel then clears customs “VAT paid” and the buyer pays nothing on delivery for VAT.
- Who needs it: a seller shipping goods up to €150 to EU consumers from its own store. Marketplace sales do not need your own registration, because the marketplace is the deemed supplier and uses its own number.
- How a UK seller registers: through an EU-established intermediary, who files the returns with you, or through a pay-as-you-go IOSS service offered by some carriers and tax providers that charges per parcel and needs no registration of your own.
- What it costs: intermediaries typically charge a monthly or annual fee plus filing; pay-as-you-go services charge a percentage or a fixed amount per shipment. For a store sending a few EU parcels a month the pay-as-you-go route is usually cheaper.
- What it does not cover: consignments over €150, excise goods, and the €3 duty. IOSS is VAT only.
OSS is a different scheme. The One-Stop Shop (Union scheme) is for sellers established in the EU or holding stock in an EU warehouse; a UK store that ships from a fulfilment centre in Germany needs a German VAT registration and OSS, not IOSS. The non-Union OSS covers services and digital products sold to EU consumers.
DDP or DAP: who pays at the border
| DAP (Delivered at Place) | DDP (Delivered Duty Paid) | |
|---|---|---|
| Who pays duty and fees | The buyer, before the carrier releases the parcel | You, at label creation; you price it in |
| Buyer experience | A payment request, a delay, sometimes a refusal | Nothing to pay, parcel delivered |
| Your cost | Nothing up front; refused parcels come back at your expense | The €3 per item type plus the carrier’s DDP fee |
| Best for | Occasional EU orders where you cannot price the cost in | Any store that ships to the EU regularly |
Since July 2026 DAP means the buyer meets a €3 duty plus a clearance fee even on a €15 order. That is a refusal rate problem, not just a cost problem, and refused international parcels are the most expensive outcome of all. Ship DDP if your carrier offers it and put the cost in the EU price or a separate EU shipping rate.
Setting up Etsy
Etsy is the deemed supplier for VAT on goods up to €150 imported into the EU, so it collects the VAT at checkout and remits it under its own IOSS number. Your part:
- Get Etsy’s IOSS number onto the customs data electronically. If you buy labels through Etsy, this happens automatically. If you use your own carrier account, enter the number in the carrier’s IOSS field; a number written on the box is not enough and leads to double VAT.
- Decide how the €3 duty is paid. Etsy does not collect the customs duty. Carriers collect it at label creation or from the buyer on delivery. Ask your carrier which, and prefer a DDP label for EU destinations.
- Price for the EU. The duty and any carrier fee come out of your margin on DDP or out of the buyer’s goodwill on DAP. Use the free Etsy fee calculator, which has fields for the €3 per-item duty and the EU regulatory operating fee by country, to see the effect on a typical order.
- Keep the customs description accurate. Item type drives the €3 count; a vague description invites reclassification into more lines.
Setting up Shopify
A Shopify store has no marketplace standing behind it, so the seller carries the VAT and the duty setup.
- VAT: register for IOSS via an intermediary or connect a pay-as-you-go IOSS service; enter the IOSS number in Shopify’s tax settings for the EU so checkout charges destination VAT on orders up to €150. Above €150 the buyer pays import VAT on delivery unless you ship DDP.
- Duties at checkout: Shopify can collect duties and import taxes at checkout on plans that include the feature; otherwise the carrier’s DDP service is the practical route.
- Carrier: choose an EU service with DDP. Royal Mail, DHL, UPS and the consolidators all offer variants; compare the DDP surcharge, not just the postage.
- Product data: HS codes and country of origin on every product. They decide the tariff line for the €3 count and, above €150, whether the 0% TCA rate applies. Add the statement on origin to the commercial invoice for UK-origin goods.
- Invoices: consumer orders do not need a VAT invoice, but the commercial invoice must show the IOSS number, values, HS codes and origin. If your invoicing app builds the customs invoice from product data, keep that data complete.
Pricing the EU order
An example with a €40 handmade item, €8 shipping, sold to Germany:
| Line | DAP, no IOSS | DDP with IOSS |
|---|---|---|
| Buyer pays at checkout | €48 | €48 + €9.12 VAT = €57.12, duty and fee priced into the €48 |
| Buyer pays on delivery | €9.12 VAT + €3 duty + about €6 carrier fee = €18.12 | Nothing |
| Seller’s extra cost | Nothing, unless the parcel is refused | €3 duty + DDP surcharge, typically €2 to €5 |
| Net effect | A €48 order becomes €66 for the buyer, after the fact | Transparent total; the seller absorbs €5 to €8 or raises the EU price |
The DDP total is higher at checkout but the DAP total is higher in reality, and the buyer finds out on the doorstep. Conversion, reviews and refusals all follow from that difference.
Frequently asked questions
Does the €3 duty apply to handmade items made in the UK?
Yes, when the consignment is a distance sale up to €150. The flat duty applies regardless of origin. Preferential origin under the TCA matters above €150, where the standard tariff would otherwise apply.
Is the €3 charged per item or per order?
Per item type in the consignment, based on tariff classification: identical products in one line count once, different product types count separately.
Do I need IOSS if I only sell on Etsy?
No. Etsy collects the VAT under its own IOSS number; you only need to pass that number to the carrier electronically. IOSS is for your own store.
What if my item is over €150?
IOSS does not apply, the buyer or you pay import VAT on delivery, and the normal duty rate applies to the product; with a statement on origin, UK-origin goods clear at 0% under the TCA. Shipping DDP still avoids the doorstep charge.
Is the €3 duty permanent?
It is temporary, from 1 July 2026 until 1 July 2028, when the EU Customs Data Hub is due to take over and standard rates apply to every consignment. A separate EU-wide handling fee has been proposed but not adopted.
Do the same rules apply to a seller in Türkiye?
Yes. Türkiye is a third country for these purposes: IOSS or VAT on delivery, the €3 flat duty up to €150, and the standard tariff above it. The customs union with the EU covers industrial goods in free circulation, so the duty position above €150 depends on the product and the documents, and is worth checking with a customs broker.
General information, not tax or customs advice
Figures as of September 2026; carrier fees vary. Confirm your own setup with your carrier and, for IOSS, with your intermediary.
Run your own numbers in the free Etsy pricing calculator, which includes the €3 per-item duty, the EU regulatory fee by country and the US tariff fields. If your shop needs its EU pricing, shipping profiles and listings reviewed together, the Etsy Shop Audit covers all three.
Sources
- Access2Markets: EU applies €3 customs duty per item on low-value e-commerce consignments
- European Commission, Taxation and Customs Union: guidance and legal text on the temporary flat fee on low-value imports
- Etsy Seller Handbook: import VAT updates and Etsy's IOSS collection
- Etsy announcement: upcoming fees for buyers in France and other EU countries
- Royal Mail: IOSS and delivered duties paid options for EU shipping
- Avalara: EU €150 customs duty exemption ended July 2026