IOSS vs OSS (Non-Union Scheme): Which VAT Scheme is Right for Your Business?

Petra Faruq
Jun 25
3 min read

If you sell to customers in the European Union (EU), understanding your VAT obligations is essential—especially if you're a non-EU business. Two key schemes often confused are the Import One-Stop Shop (IOSS) and the One-Stop Shop (OSS) Non-Union scheme. While both are designed to simplify VAT compliance, they serve different business models.

In this article, we’ll explain the key differences between IOSS and OSS (Non-Union), and help you determine which scheme is best for eCommerce businesses and B2C SaaS or digital services.

What is the IOSS?

The Import One-Stop Shop (IOSS) is a special VAT scheme for distance sales of goods imported into the EU. It applies when:

Goods are sold to EU consumers,
The consignment value is €150 or less,
Goods are shipped from outside the EU.

IOSS is ideal for eCommerce businesses selling physical goods directly to EU customers via their own website or online stores like Shopify or WooCommerce. It allows VAT to be collected at the point of sale and remitted through a single monthly return.

Key Features of IOSS:

Applies only to physical goods under €150,
Simplifies customs clearance (no surprise fees for customers),
Requires a VAT intermediary for non-EU businesses (such as LumioPro),
Covers all EU Member States through one registration.

What is the OSS (Non-Union) Scheme?

The One-Stop Shop (OSS) Non-Union scheme is for non-EU businesses providing digital services to EU-based consumers (B2C). These services include:

Software and apps,
Streaming services,
Online courses or memberships,
Website hosting,
eBooks and downloads.

Instead of registering for VAT in every EU country where you have customers, OSS allows you to:

Register in one Member State,
Charge the correct VAT rate in each customer’s country,
File one consolidated quarterly VAT return.

Key Features of OSS Non-Union:

Applies to digital B2C services, not goods,
For non-EU businesses only,
Covers all 27 EU countries,
Requires VAT collection based on the customer’s location.

IOSS vs OSS (Non-Union): At a Glance

Feature	IOSS	OSS (Non-Union)
Type of supply	Physical goods (under €150)	Digital services (B2C)
Customer type	EU consumers (B2C)	EU consumers (B2C)
Applicable to non-EU sellers	Yes	Yes
EU VAT registration required	Yes, via an intermediary	Yes (direct registration)
Reporting frequency	Monthly	Quarterly
VAT collected at point of sale	Yes	Yes
Use case example	eCommerce store shipping goods	SaaS company selling to EU users

Which Scheme Should You Use?

For eCommerce Sellers (Physical Products)

If you sell physical goods under €150 to EU customers and ship from outside the EU, the IOSS scheme is your best option.

Benefits:

VAT is collected upfront—no surprise fees for your customers,
Fast customs clearance,
One IOSS number for all EU countries.

LumioPro can act as your authorised IOSS intermediary and handle registration, reporting, and VAT submissions.

For B2C SaaS and Digital Services

If you offer digital services to private individuals in the EU (e.g. software subscriptions, online courses), you should register for the OSS Non-Union scheme.

Benefits:

Avoids multiple VAT registrations in the EU,
Quarterly filing simplifies administration,
Required by law to comply with EU VAT rules for digital services.

Final Thoughts

Both IOSS and OSS (Non-Union) schemes are powerful tools for simplifying VAT compliance in the EU, but they serve distinct purposes.

IOSS is the go-to for low-value physical goods sold online.
OSS Non-Union is designed for digital services delivered to EU consumers.

At LumioPro, we specialise in helping non-EU businesses register for and manage their IOSS obligations with ease. While we currently offer IOSS intermediary services, we can also guide you toward reliable OSS Non-Union registration options.

Need help deciding which scheme suits your business? Get in touch with us today for tailored advice.