If you dropship to customers in other EU countries, the question that decides your VAT setup is not how much you sell. It is where your customers are. In the classic dropshipping model, where your supplier ships straight to your customer, you need a VAT registration in every EU country you sell to. The One-Stop-Shop (OSS) does not cover these sales, and the €10,000 EU threshold does not apply to them.
This guide gives you the short answer, the reason behind it and a simple way to work out your own list of countries with three questions. For the full legal background, read our two in-depth articles: VAT compliance for dropshipping and dropshipping and OSS.
The short answer
- You need a VAT registration and regular VAT returns in every EU country where your end customers are.
- This applies from the first sale. The €10,000 EU-wide threshold for distance sales does not apply to dropshipping, because dropshipping is a chain transaction.
- OSS is not an option for classic dropshipping. Reporting these sales through OSS does not make you compliant.
- You keep filing VAT returns in your home country as well.
Why: dropshipping is a chain transaction
For VAT purposes, dropshipping is a chain transaction. There are two sales contracts for the same goods, one between the supplier and you and one between you and your customer, but only one physical shipment: from the supplier directly to the customer.
In a chain transaction only one of the two sales is the moving supply, the one the transport is attributed to. When your supplier organises and carries out the shipment, the moving supply is the supplier’s sale to you. Your sale to the customer is the non-moving supply, and it is taxed where the goods are when the transport ends: in your customer’s country.
OSS only covers intra-EU distance sales of goods, where the seller dispatches the goods (in Germany, § 3c UStG). A non-moving supply follows a different place-of-supply rule, so it cannot be reported through OSS. From the outside it looks like an ordinary cross-border online sale. For VAT, it is not one.
Example. A German online shop sells to a customer in Poland. Its German supplier ships the order directly to Poland. The shop’s sale to the customer is a Polish supply, so the shop must register for VAT in Poland. Tax authorities do not accept these sales in an OSS return.
Work out your countries with three questions
1. Where do the goods ship from?
If your supplier, your business and your customer are all in the same country, everything stays domestic: you only deal with your home country’s VAT, and you can deduct the VAT your supplier charges you as input tax.
As soon as the customer is in another EU country, your registration follows the customer. It makes no difference whether the supplier ships from your own country or from a third EU country: a German shop with a Polish supplier selling to a French customer needs a French VAT registration, exactly like a German shop with a German supplier selling to France.
If the goods ship from outside the EU, the next question decides more than the country list.
2. Goods from outside the EU: who imports them, and are orders worth more than €150?
Since July 2021 all goods imported into the EU are subject to import VAT, whatever their value. Who pays it, together with any customs duties, depends on who is the importer of record. In classic dropshipping that is often your customer, who pays the carrier or customs on delivery. If that is your setup, say so clearly at checkout: customers who are surprised by import charges leave bad reviews. You can be the importer of record yourself, but in practice only if you receive the goods, which is no longer classic dropshipping.
For consignments up to €150, the EU created the Import One-Stop-Shop (IOSS) to simplify import VAT. hellotax does not offer IOSS services.
Above €150, customs duties can apply as well, and your sales to customers in the EU follow the same rule as in question 1: you need a VAT registration in every country where you sell.
3. Which countries do you sell to?
That list is your list of VAT registrations. Each country has its own standard and reduced VAT rates, from 19% in Germany to 27% in Hungary, so your shop must charge the right rate per country and your prices may need adjusting. Your accounting needs to map source and destination countries for every order.
| Your setup | Example | Where you need a VAT registration |
|---|---|---|
| Supplier, you and customer in one country | All in Germany | Your home country only |
| Supplier in your country, customer abroad | German supplier ships to a customer in France | France, plus your home-country returns |
| Supplier in another EU country | Polish supplier, German shop, customer in France | France, plus your home-country returns |
| Customers in several EU countries | German supplier, customers in France, Italy and Poland | France, Italy and Poland, plus your home-country returns |
| Supplier outside the EU | Supplier in Asia, customers in the EU | Depends on the importer of record and the order value (see question 2) |
“My accountant told me to use OSS”
It has become common practice for dropshippers to report their sales through OSS, often because local accountants and compliance providers advise it. It does not make you compliant. Under the current rules you still need a VAT registration in every EU country where you sell, and every quarter reported the wrong way builds up undeclared VAT in those countries.
The one exception, and why it rarely fits
OSS becomes possible only if you take over the shipment. You would have to commission and pay the carrier that takes the goods from your supplier to your customer, and register for VAT in the country where the shipment starts, using that VAT number with your supplier. The moving supply is then yours. In practice this changes your logistics so much that it is no longer the dropshipping setup most sellers want.
For goods coming from outside the EU, the equivalent is organising the transport yourself and declaring the goods for free circulation in your own name, or through an indirect representative.
Checklist before you sell into a new EU country
- List the EU countries where your customers are, or will be.
- Ask your supplier where each product actually ships from.
- If goods come from outside the EU, agree who is the importer of record and tell customers at checkout if they will pay import charges.
- Register for VAT in each country before the first sale. There is no threshold to wait for.
- Set the right VAT rate per country and product, including reduced rates.
- Make sure your accounting maps every order’s source and destination country and documents the chain.
- Keep filing your home-country VAT returns.
How hellotax helps dropshippers
We take care of VAT registrations and ongoing VAT returns for online sellers in the main EU markets and the UK, with our own VAT software and a team of local tax advisors. In a free consultation we look at your sales flows, where your goods ship from and where your customers are, and tell you exactly which registrations you need. Book a free consultation or see the countries and prices.
FAQ
Is there a sales threshold before I have to register?
No. The €10,000 EU-wide threshold applies to distance sales you dispatch yourself. Dropshipping is a chain transaction, so the threshold does not apply and you need the registration from the first sale.
I already have an OSS registration. Can I report my dropshipping sales there?
No. OSS stays useful for distance sales you ship yourself from your own stock. Sales shipped by your supplier need a VAT registration in the customer’s country.
Do I still need to file VAT returns at home?
Yes. Your foreign registrations come on top of your home-country VAT returns.
Can hellotax handle IOSS for my low-value imports?
No. hellotax does not currently offer IOSS services.
The post Dropshipping VAT in the EU: Which Countries Do You Have to Register In? (2026 Guide) appeared first on Hellotax Blog.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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