VAT Compliance for US Dropshippers in the EU Brenda Varela | usagoldmines.com

VAT compliance for US dropshippers in the EU: understand registration triggers, IOSS/OSS, and how hellotax keeps your cross-border sales compliant.

Selling from the US into Europe via dropshipping can be very profitable—but VAT compliance for US dropshippers is non-negotiable. Between import VAT, IOSS, OSS, and local registrations, one mistake can mean blocked parcels, angry customers, or fines. This guide explains how EU VAT dropshipping works in 2026, what applies to US-based sellers, and how hellotax can take most of the complexity off your plate on the VAT and OSS side.

1. Introduction: Why VAT Compliance Matters for US Dropshippers in the EU

If you’re running a US-based dropshipping business and shipping to EU customers, you’re not just dealing with shipping and product margins. VAT compliance for US dropshippers is part of the business model.

European tax authorities expect you to:

• Charge VAT correctly at checkout

• Make sure goods can clear customs without surprises

• File VAT (and where relevant, OSS) returns on time

When EU VAT dropshipping is handled badly, you’ll see:

• Parcels held or returned by customs

• Customers charged unexpected VAT + fees on delivery

• Refunds, chargebacks, and negative reviews

• Platform issues or even account suspension

Handled properly, VAT becomes just another backend process, automated and predictable.

2. How EU VAT Differs from US Sales Tax

For US sellers, the biggest mental shift is understanding that VAT is not sales tax:

• VAT is a consumption tax on the value added at each stage.
  Businesses charge VAT on sales and deduct VAT paid on purchases.

• Rates are set per country, not per US-style “state,” and are usually between ~17–27%.

• VAT is normally included in the price shown to consumers. If you list €100, the customer expects that price to be “all in,” VAT included.

In EU VAT dropshipping, the key question is:

Who is responsible for charging and reporting VAT—the platform, the supplier, or you as the merchant of record?

If you are the one selling to the final consumer (even if a supplier ships), the EU will usually treat you as the VAT-liable seller.

3. When US Dropshippers in the EU Must Register for VAT

For VAT compliance for US dropshippers, there are three common scenarios.

3.1 Direct shipping from the US (no EU stock)

You:

• Are a US company

• Sell via your own store or marketplace

• Ship products from the US directly to EU consumers

Key points:

• For shipments up to €150, you can use the Import One-Stop Shop (IOSS).

• For shipments above €150, import VAT and customs duties are due at the border.

Even if you never store stock in the EU, customs still expect VAT to be paid. You either:

• Collect VAT at checkout (using IOSS), or

• Let the customer pay upon delivery (usually a bad customer experience).

There is no “safe” turnover threshold for non-EU sellers in practice: once you regularly ship to EU consumers, you should assume that VAT applies from the first sale.

3.2 EU VAT dropshipping with EU-based suppliers or warehouses

Here, you:

• Use an EU-based supplier who ships on your behalf from inside the EU, or

• Use an EU 3PL / warehouse (or Amazon FBA) to store and ship your goods

If goods are shipped from within the EU, then:

• You generally need a local VAT registration in each country where stock is held, and

• You charge VAT as if you were an EU seller, often using OSS for cross-border B2C sales.

Storing inventory in the EU is a strong trigger for VAT compliance for US dropshippers—you cannot rely on thresholds. Local registration is expected from day one of holding stock.

3.3 Marketplaces (Amazon, Etsy, eBay) and “deemed supplier” rules

For marketplace sales, EU rules sometimes treat the platform (e.g., Amazon) as the “deemed supplier” for low-value consignments and certain non-EU seller setups. That can mean:

• The marketplace collects and remits VAT on some sales

• Your invoicing and pricing still must be aligned with VAT rules

• You may still need VAT numbers for other flows (e.g., FBA storage, B2B, returns)

So even with marketplace support, EU VAT dropshipping does not disappear. It just shifts who reports what. You still need to understand your obligations.

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4. IOSS, OSS, and Local VAT – Which Schemes Apply?

To get VAT compliance for US dropshippers right, you need to know the three main systems:

4.1 IOSS – Import One-Stop Shop (for low-value imports)

Use IOSS if:

• You ship goods from outside the EU directly to EU consumers

• Each shipment to the customer is worth no more than €150 (excluding transport/insurance)

With IOSS, you:

• Collect local VAT at checkout

• Use one IOSS ID for all EU countries

• File a single monthly IOSS return in one Member State

As a US business, you normally must appoint an EU-based intermediary (fiscal representative) to use IOSS.
hellotax does not currently act as an IOSS intermediary, but we can help you understand when IOSS is relevant for your model so you can work smoothly with a specialised IOSS provider if needed.

4.2 OSS – One-Stop Shop (for intra-EU B2C sales)

Use OSS if:

• You have stock inside the EU

• You sell B2C from one EU country to consumers in other EU countries

OSS lets you:

• Report all cross-border B2C EU sales in one quarterly return

• Avoid registering separately for VAT in every customer country

However, you still need local VAT returns in any country where you store stock, for domestic sales and stock movements.

4.3 Local VAT registrations

You need local VAT numbers:

• In any EU country where you hold inventory (own warehouse, 3PL, Amazon FBA, etc.)

• Possibly in specific countries where you have other taxable activities that are not covered by IOSS/OSS

Local VAT registration is the backbone of EU VAT dropshipping once you move beyond pure “ship from US” setups.

For an official overview of how OSS works for cross-border B2C sales, see the European Commission’s One Stop Shop (OSS) guidance on the Taxation and Customs Union website.

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5. Step-by-Step VAT Compliance Plan for US Dropshippers

Here’s a practical roadmap.

Step 1 – Map your model

Answer:

• Where are products shipped from? (US only, EU only, or mixed?)

• Do you hold stock inside the EU? If yes, in which countries?

• Are you selling via your own store, marketplaces, or both?

This defines whether you focus mainly on IOSS, OSS, or a combination plus local VAT.

Step 2 – Decide how to handle imports

If you ship from the US directly:

• For consignments ≤ €150: strongly consider IOSS so customers don’t pay VAT at delivery

• For consignments > €150: decide whether the customer pays VAT/duties (DDU) or you arrange DDP via a logistics partner

Be transparent on checkout pages. Hidden customs costs are one of the fastest ways to kill your EU conversion rate.

Step 3 – Register where required

For VAT compliance for US dropshippers, this often means:

• Local VAT registrations in each country where you hold stock

• OSS registration in your main EU country of registration, to cover cross-border B2C sales inside the EU

• Considering IOSS (via an external intermediary) if your model is mostly low-value imports sent directly from the US

hellotax can handle your local VAT and OSS registrations and filings, and advise you on how IOSS would fit into your overall compliance strategy, even though we don’t provide IOSS as a service at this time.

Step 4 – Configure your store and pricing

Make sure your ecommerce system can:

• Show VAT-inclusive prices where expected (almost everywhere in the EU)

• Apply the correct VAT rate per country and product type

• Record whether VAT was charged under IOSS, OSS, or local VAT

Most major platforms (Shopify, WooCommerce, etc.) can do this—but they must be configured correctly.

Step 5 – File returns and keep records

For full VAT compliance for US dropshippers, you must:

• File OSS and local VAT returns (and IOSS, if you use it through a third-party intermediary) on time

• Keep invoices, transaction data, customs documents, and marketplace reports for several years

• Reconcile platform data with filed returns regularly

Automated tools like hellotax drastically reduce manual work and the risk of human error on the VAT and OSS side.

6. Common VAT Risks and Mistakes for US Dropshippers in the EU

Here are the recurring issues we see when auditing EU VAT dropshipping setups:

• Assuming “no nexus” = no VAT
  EU VAT is not a US nexus. Shipping into the EU is enough to create obligations.

• Ignoring low-value import rules
  Sending many <€150 parcels without IOSS leads to customs delays and customer complaints.

• Storing stock in the EU without local VAT registrations
  Using EU warehouses or Amazon FBA but not registering locally is a red flag for tax authorities.

• Mixing IOSS, OSS, and local VAT wrongly
  Reporting the same sale twice—or not at all—because systems are not aligned.

• Weak documentation
  Missing invoices, inconsistent CSV exports from platforms, unclear proof of transport, or value.

The good news: most of these problems are preventable with the right structure and tools.

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Our VAT experts are happy to help you. Book a free consultation today!

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7. How hellotax Supports VAT Compliance for US Dropshippers in the EU

hellotax is built around the realities of VAT compliance for US dropshippers and other non-EU sellers.

We help you with:

• OSS and local VAT setup
  We handle local VAT and OSS registrations and filings in the EU countries where you need them, so your cross-border and domestic flows are reported correctly.

• Multi-country VAT registrations
  Local VAT numbers in any EU country where you hold stock or otherwise need a registration.

• Automated data collection
  Direct integrations with Amazon, Shopify and other platforms so your EU VAT dropshipping data flows into one dashboard.

• Return preparation and filing
  We prepare OSS and local VAT returns based on your real data and submit them on time.

• Tax letter inbox & local support
  One place for all EU tax correspondence, with translation and clear action points, plus access to local VAT experts and fiscal reps where required. For more information about our service, check here.

For IOSS, we currently do not act as an intermediary, but we can help you understand your obligations, align your data, and work smoothly with a dedicated IOSS provider if and when you decide to use the scheme.

Want to see how your current setup looks from a tax authority’s perspective?
Book a free VAT strategy session with hellotax and get a clear map of where you must register, file and monitor EU VAT—before issues arise.

8. FAQs – EU VAT Dropshipping for US Sellers

Do US dropshippers really need VAT numbers in the EU?
Often yes. If you store goods in an EU country or are the merchant of record for sales shipped from the EU, you usually need at least one EU VAT number, plus OSS where applicable.

Can I just let the customer pay VAT on delivery?
Technically you can for shipments above €150 or if you don’t use IOSS—but it leads to bad customer experience, higher return rates, and sometimes parcels being refused. Using IOSS (through an intermediary) for low-value consignments is usually better.

Does Amazon or another marketplace handle all EU VAT for me?
Sometimes platforms are “deemed suppliers” for certain flows and charge VAT on your behalf, but not always. If you hold inventory in EU FBA warehouses or make B2B sales, you may still need your own VAT registrations and filings.

What if I only make a few EU sales per month—do I still need to worry?
Yes. For non-EU sellers, there is usually no meaningful threshold: the first regular EU sales or imports can already trigger VAT obligations. Smaller volumes still need proper VAT compliance for US dropshippers in the EU.

If you’re a US dropshipper in the EU working with multiple suppliers or warehouses for the same order, you may already be in a chain transaction without realising it. These multi-step supplies can shift where VAT is due and who is liable. To understand how this affects your setup, check our guide on VAT chain transactions in the EU for practical examples and risk points.

9. Key Takeaway and Next Steps

The core message is simple:

If you’re a US dropshipper selling to EU customers, VAT is part of your business model—whether you like it or not.

To stay safe and scalable you should:

• Map your supply chain (where goods are stored and shipped from)

• Decide on the right combination of IOSS (via an intermediary), OSS and local VAT registrations

• Automate as much as possible—data capture, calculations, and filings

• Work with specialists who understand EU VAT dropshipping from end to end

With the right setup, VAT compliance for US dropshippers in the EU stops being a growth blocker and becomes a solved problem in the background.

Ready to make the EU your next growth market—without VAT headaches?
Contact hellotax today for a free consultation and let our team design a VAT compliance plan tailored to your US dropshipping business.

Book a free consultation

Our VAT experts are happy to help you. Book a free consultation today!

Free consultation