Since Brexit, the IOSS scheme has helped brands make EU cross-border eCommerce feel cleaner: pre-collected VAT, fewer surprise charges, smoother delivery. In 2026, this doesn't tell the full story.
For brands, the issue isn't whether IOSS works, but if parcel-by-parcel cross-border fulfilment still makes commercial sense as customs fees rise and scrutiny increases.
Let's explore what's changed, why it matters, and what the smartest brands are doing next.
First, a definition. IOSS – the Import One-Stop Shop – is the EU's VAT simplification scheme for distance sales of imported goods in consignments that don't exceed €150. It allows sellers to report and pay import VAT across all eligible EU consumer sales through one registration, rather than separate VAT processes by country.
Put simply, IOSS lets a brand collect VAT from the customer at checkout and remit it centrally. When it works well, shoppers get a cleaner checkout experience, with no unexpected charges on delivery.
There is, however, a distinction that's quite easy to miss. IOSS is a VAT mechanism, not a full customs simplification solution. It doesn't remove customs obligations, it doesn't protect against parcel-level import fees, and it doesn't protect brands from how individual EU member states are beginning to process inbound low-value shipments.
This distinction has always been true. What's changing now is how much it costs to ignore it.
Here's fulfilmentcrowd Chief Delivery Officer Chris White on EU compliance changes and what brands should be doing now.
Some significant shifts have made the IOSS conundrum much more complicated for brands.
In July 2025, the EU Council formally adopted changes designed to make suppliers more directly responsible for import VAT on a wider range of low-value eCommerce sales.
The explicit goal is to close VAT collection gaps and encourage wider IOSS adoption. The EU's direction is clear: it's looking for sellers to be accountable for VAT at point of sale and is building the regulatory architecture to enforce it.
A big structural change is the removal of the customs duty exemption for parcels valued below €150. The EU agreed to introduce a temporary €3 per-item customs duty from July 2026, while the broader customs reform infrastructure – including the EU Customs Data Hub (2028) – is built.
With this comes the end of a long-standing structural advantage that made low-value cross-border eCommerce into the EU commercially attractive. For brands that have built their EU operating model on this structure, 2026 makes a direct cost increase that sits outside of VAT compliance.
Before the EU-wide changes fully land, individual member states have already begun introducing their own fees and clearance rules.
| Market | Fee | Application |
| France | €2 per tariff line | From 1 March 2026. Applied per tariff line on simplified declarations for parcels entering France, Monaco and certain overseas territories. Regardless of country of origin or contents. |
| Italy | €3 per parcel | From January 2026. Applied per parcel for clearance taking place in Italy. |
| Romania | €5 per parcel | From January 2026. Applied per parcel on entry into Romania, regardless of where clearance took place. |
Application of these fees isn't yet harmonised. There are some main debates shaping how each country applies them: whether to use simplified or full declarations for low-value goods, whether to apply fees on entry into a country regardless of destination or only to the destination country, and whether to apply fees per HS code or per parcel.
Every one of these distinctions will change the landed cost calculation for a brand shipping into a specific market.
Low-value eCommerce parcels have been a growing customs challenge for some time. By the end of 2025, an estimated 5.8 billion low-value consignments were being shipped into the EU annually – up from 4.6 billion in 2024, an increase of 26%. These shipments represent the overwhelming majority of imported eCommerce items by volume.
It's the sheer scale of low-value imports that has caused authorities to tighten their controls. The EU can't continue to manage billions of parcels through light-touch supervision while collecting VAT correctly and protecting domestic retailers from the unfair cost advantages enjoyed by non-EU sellers. As a consequence, the landscape is changing and providers will all face more declarations, greater tariff-line sensitivity, stricter carrier compliance requirements and more member-state variation in how clearance is handled.
For DTC brands shipping into the EU, this isn't a temporary headache to wait out.
Customer expectations across European eCommerce often converge around a similar set of demands: fast delivery, easy returns, no surprises at checkout or on the doorstep.
IOSS helped brands get closer to that standard, as pre-collected VAT at checkout removed a major source of unpleasant surprises. But even a compliant IOSS shipment can deliver a poor customer experience if:
IOSS was designed to solve a VAT problem, but the friction points emerging in 2026 are customs, carrier routing and unit economics issues. They all sit outside what a VAT scheme was intended to address.
Cross-border parcel models can lead to significant operational overhead that doesn't always appear in simple fulfilment cost comparisons. For brands running EU cross-border models today, that overhead is growing – and set to continue.
There's a lot of ongoing management work required: monitoring changing rules by market (often with little notice), reconciling landed cost assumptions across markets, managing customs data quality to minimise clearance risks, aligning carrier relationships, handling exception cases, the list goes on.
The carrier market is itself responding in different ways. Some postal operators are maintaining simple destination-country-only clearance models, others are moving towards cluster routing models that align parcel flows to specific customs agreement zones to keep costs down, while certain carriers are still pursuing direct agreements with specific customs authorities.
For brands, carrier choices, routing decisions and clearance strategies are all becoming interconnected in ways that require much more active management.
But don't worry: none of this overhead is insurmountable. However, it is real, it is growing, and it's unlikely to simplify in the near future.
An advantage of cross-border parcel shipping is that duty and VAT costs are spread across individual transactions, rather than arriving in bulk. If your brand suffers from poor cash flow, this distribution can feel more manageable.
Stock localisation changes that structure. Placing stock inside the EU involves bulk clearance on inbound inventory, which means a larger upfront duty and VAT obligation. If you're a smaller brand considering local fulfilment for the first time, be aware that it can create some cash flow pressure in the transition period.
This cash flow trade-off is real – and definitely worth planning for – but it's just one factor in the analysis, not the whole picture. The question is whether unpredictable rising per-parcel costs of cross-border DTC and ever-changing compliance rules represent a better or worse long-term position than the more controllable cost structure of local fulfilment. There's no common right answer here – it all depends on how your brand currently operates.
In the end, many high-growth brands will consider stock localisation due to its distinct advantages, especially as more import fees begin to be introduced.
The case for placing stock inside the EU isn't just about import charges. As well as economic benefits, stock localisation removes a lot of the operational friction international brands face today.
Once your goods are cleared into the EU at a bulk level, every subsequent consumer order ships ‘domestically’ within the EU trading bloc. This changes the economics and customer experience across the board:
For brands that sell seriously into France, Germany, the Benelux or other major EU markets, the combination of the €3 EU-level duty from July 2026, country-level fees like France’s €2 per tariff line, and the operational overhead described above create a compelling case for reviewing current models.
The next phase of EU cross-border commerce is here, and the winners will be the brands with the least friction.