E-commerce sellers must pay VAT on EU imports starting in 2028

Starting in July 2028, sellers engaging in e-commerce will see a crucial shift in their responsibilities regarding Value Added Tax (VAT) on goods imported into the European Union (EU). Until this change, businesses outside the EU could shift their obligation to collect VAT to the customers. However, the new regulations will place the responsibility squarely on the shoulders of sellers and the platforms facilitating these sales. If sellers opt out of using the Import One-Stop Shop (IOSS), they will need to register for VAT within every EU member state where their goods are destined, complicating the already intricate compliance landscape. The current system allows for VAT to be paid at the point of import or, under certain circumstances, at the point of sale for low-value goods. Up until 2028, sellers had the option of leveraging IOSS for a streamlined approach, allowing them to collect VAT during the sale, provided their goods fell under the €150 threshold. However, this system has been under scrutiny for its limitations, including delays and poor delivery experiences. Following the new rules, it is clear that relying on IOSS will become the more favorable option for sellers due to the significant administrative challenges of registering for VAT in multiple EU countries. This regulatory change aims to improve the efficiency and speed of VAT collection on cross-border e-commerce transactions. By centralizing VAT responsibilities with sellers, the EU hopes to create a more consistent and reliable experience for consumers while also safeguarding revenue loss that had been an issue with the previous framework. As a result, sellers need to prepare for these changes or face potential consequences, including customs clearance issues for goods being imported into the EU. All parties involved—businesses, consumers, and governments—are urged to understand the implications of these upcoming changes carefully. E-commerce sellers will need to reassess their strategies in light of the new VAT obligations, as the failure to comply could result in substantial logistical challenges, delays in product delivery, and financial penalties. As July 2028 approaches, businesses must equip themselves for this shift in responsibility and foster compliance to avoid complications in the marketplace.