What did the EU Council adopt regarding import VAT in July 2025?

On July 18, 2025, the EU Council formally adopted new rules simplifying VAT collection for distance sales of imported goods, set to take effect in 2028.

When will the new EU VAT rules for imports come into force?

The new rules will become effective on July 1, 2028, providing non-EU suppliers time to adjust to the new VAT obligations.

How do the new rules impact non-EU suppliers and platforms?

Non-EU suppliers and platforms will now be liable for VAT on imported goods, making IOSS registration more attractive to avoid separate VAT registrations in each EU country.

What is the Import One-Stop-Shop (IOSS) and why is it important?

IOSS is a system that allows suppliers to register in one EU country for VAT reporting across the EU. It's especially helpful under the new rules for non-EU businesses to simplify compliance.

How will the VAT burden change under the 2028 rules?

The VAT liability will shift from consumers to non-EU suppliers and platforms, meaning VAT must be paid upfront rather than by the buyer upon import.

Why is the EU implementing these new VAT rules?

The EU aims to increase tax revenue, improve VAT compliance, and address inefficiencies in the current system by streamlining obligations for non-EU importers.

EU Finalizes 2028 VAT Rules for Non-EU Importers

In May, the EU's Economic and Financial Affairs Council (ECOFIN) announced that EU countries reached an agreement on the Directive on import VAT rules applicable to distance sales of imported goods. Following that agreement, the Council of the EU formally adopted new rules simplifying tax collection for imports on July 18, 2025. The new VAT rules for distance sales of imported goods aim to encourage more non-EU suppliers to use the Import One-Stop-Shop (IOSS) for VAT reporting and collection.

Impact on Non-EU Suppliers

Since 2021, non-EU and EU suppliers can use IOSS as a point of contact when importing goods from third countries into the EU. The IOSS simplifies declaring and paying VAT by allowing a single registration in one EU country, even when sales are made across the EU.

Under the newly adopted rules, non-EU suppliers and platforms are liable for paying VAT on goods imported from outside the EU. Consequently, it is expected that more non-EU suppliers and platforms will register for the IOSS scheme to report and pay due VAT. The main reason for this is that those who do not register for IOSS will have to register separately for VAT in each EU country where they sell goods.

The new rules transfer the VAT burden from the end consumers, who were previously liable for paying the import VAT, to non-EU suppliers and platforms. Once the rules become effective, scheduled for July 1, 2028, the VAT on imported goods will be paid upfront, which is expected to increase tax revenues and enhance VAT compliance on imported goods across the EU.

Conclusion

The EU recognized the imperfections of the previously established rules for imported goods, and adopting new rules marks a decisive step towards addressing these issues. By shifting the VAT liability from consumers to non-EU suppliers and platforms, the rules create a more consistent and transparent tax environment, fostering optimism for a more efficient system.

Moreover, after four years, the EU further modernizes the VAT framework, and expects an increase in IOSS registrations. Non-EU suppliers and platforms operating in the EU market must understand new rules, assess their readiness to comply, and consider registering for IOSS to avoid fragmented compliance across the EU, ensuring they are well-informed and prepared for the changes.

Source: European Council, VATabout