In recent years, e-commerce has experienced exponential growth. This development has transformed the ways goods and services are exchanged and expanded market access, even for small and medium-sized enterprises. Selling products through digital platforms has made it easier to reach consumers across multiple EU Member States and beyond.
However, this expansion has also created new tax challenges, particularly regarding VAT compliance and the management of cross-border obligations. In this context, the use of tools such as the IOSS Scheme (Import One Stop Shop) has become increasingly relevant.
It provides a simplified framework for VAT compliance on distance sales of goods imported from non-EU countries.
How can VAT compliance for B2C online sales within and outside the EU be simplified?
In response to these needs, the European Union has introduced targeted regulatory instruments, including the One Stop Shop (OSS) scheme.
It aimed at simplifying the declaration and payment of VAT on distance sales to private consumers in other Member States.
This analysis examines the main tax aspects of e-commerce, with a specific focus on the IOSS regime.
For further insights on direct VAT identification, you can consult our dedicated article.
OSS: the VAT One Stop Shop for intra-Community distance sales
As of 1 July 2021, the OSS (One Stop Shop) scheme has become a key simplification tool for businesses carrying out B2C sales within the European Union.
In this framework, the OSS allows suppliers to declare and pay VAT centrally through a single quarterly return.
The OSS return is filed in the Member State of identification.
This mechanism:
- avoids the need for VAT registration in each Member State of consumption;
- applies to intra-Community distance sales of goods and B2C supplies of services;
- It also applies to certain transactions facilitated by digital platforms.
Even below the EU-wide threshold, suppliers may opt for taxation in the destination Member State using the OSS.
OSS registration produces effects only for future transactions.
Nevertheless, it is widely adopted due to the significant reduction of VAT compliance burdens across multiple Member States.
Alongside the OSS, the EU legislator introduced the Import One Stop Shop (IOSS).
The IOSS specifically simplifies VAT compliance for distance sales of goods imported from non-EU countries.
The deemed supplier concept
When does a marketplace qualify as a “deemed supplier” for VAT purposes?
As of 1 July 2021, certain digital platforms facilitating B2C goods sales within the EU may qualify as “deemed suppliers”.
In such cases, the platforms become responsible for the collection and payment of VAT on the facilitated transactions.
This framework is set out in Article 2-bis of Presidential Decree No. 633/1972, implementing Article 14a of Directive 2006/112/EC.
Under this legislation, where a taxable person uses an electronic interface, such as a marketplace, portal or similar digital platform, to facilitate certain supplies of goods to private consumers, the interface is deemed, for VAT purposes, to have acquired and resold the goods concerned.
Effects of the legal fiction
Who is required to charge and remit VAT on sales facilitated by digital platforms?
The application of the deemed supplier rules entails a legal fiction whereby a B2C sale facilitated by a platform is split, for VAT purposes, into two distinct transactions:
- a B2B supply from the original supplier (the so-called indirect supplier) to the platform;
- a B2C supply from the platform to the final consumer.
As a result, the obligation to charge, declare and remit VAT lies with the digital platform, which assumes the role of taxable person vis-à-vis the final customer.
Objective and subjective scope of application
In which cases does the deemed supplier regime apply, and to which operators?
The deemed supplier mechanism does not apply to all B2C sales facilitated, but is limited to specific categories of transactions.
It operates exclusively where the digital platorm plays an active role in the transaction.
In particular, the regime applies to:
- distance sales of:
- goods imported from third countries,
- intrinsic value of the consignment does not exceed EUR 150,
- made to consumers established in the European Union;
- intra-Community distance sales or domestic supplies carried out by suppliers not established in the European Union, regardless of the value of the shipment.
Conversely, domestic or intra-Community supplies made by EU-established suppliers fall outside the deemed supplier regime, even if platform-facilitated.
The concept of “facilitation” of a sale
What does it mean to “facilitate” a sale for VAT purposes?
Pursuant to Article 5c of Council Implementing Regulation (EU) No. 282/2011, a platform is considered to “facilitate” a sale where it enables contact between the purchaser and the supplier and is involved in at least one of the following activities:
- setting the terms and conditions of the supply;
- authorising or processing the payment;
- participating in the ordering or delivery process of the goods.
Conversely, a platform does not qualify as a deemed supplier where it merely performs technical or promotional functions.
Such functions include listing goods, advertising activities, or redirecting users to other websites.
The platform is also excluded where it lacks relevant information on the transaction.
This includes the time of sale completion, the location of the goods, or their final destination.
The Merchant of Record (MoR)
Closely linked to the effective management of B2C sales is the concept of the Merchant of Record (MoR).
The MoR is the entity that, in operational practice, assumes tax and operational responsibility vis-à-vis the final customer.
In particular, the MoR:
- is the party that is treated as selling to the final customer for tax purposes;
- collects payments;
- issues fiscal documentation;
- manages VAT, returns, refunds and chargebacks;
- bears most of the tax and operational risk.
Tax treatment of the MoR
Under the MoR model, contractual analysis and the assessment of actual economic flows are essential.
The key issue is to correctly identify who qualifies as the seller for VAT purposes vis-à-vis the final consumer and how the relationships between the brand, the MoR and the platform are structured.
This determination directly affects VAT treatment, revenue recognition, margins and tax liabilities.
The MoR concept attracts particular scrutiny.
Where even one function is performed jointly with another entity, reclassification risks may arise.
In such cases, the other entity may be regarded as the actual supplier, with the consequence of losing VAT input deduction.
Import One Stop Shop (IOSS)
What is the IOSS special VAT scheme?
The Import One Stop Shop (IOSS) is also an optional special scheme, introduced as of 1 July 2021 (Legislative Decree No. 83/2021, implementing Directive (EU) 2017/2455).
It simplifies the declaration and payment of VAT on distance sales of goods imported from third countries with an intrinsic value not exceeding EUR 150.
At national level, it is governed by Article 74-sexies.1 of Presidential Decree No. 633/1972, while at EU level it is regulated by Articles 369-terdecies to 369-vicies quinquies of Directive 2006/112/EC.
The regime was introduced following the abolition of the VAT exemption for low-value consignments.
In fact, all goods imported into the EU are now subject to VAT.
However, the exemption from customs duties remains applicable for goods valued up to EUR 150.
The IOSS scheme allows for:
- VAT to be charged and collected at the time of order,
- the submission of a VAT-exempt customs declaration,
- the monthly payment of VAT through the Member State of identification.
Eligible persons include:
- individuals or entities domiciled or resident in Italy,
- non-EU entities with a permanent establishment in Italy,
- non-EU entities without a permanent establishment,
- facilitators of sales through digital platforms (deemed suppliers pursuant to Article 2-bis of Presidential Decree No. 633/1972).
The regime applies to distance sales of goods physically shipped from third countries to EU customers, with a value not exceeding EUR 150.
Excisable goods are excluded from the scope of the regime.
The scheme also:
- covers goods destined for the supplier’s Member State of identification;
- applies to goods sold under dropshipping arrangements.
Registration and functioning of the IOSS
How to obtain an IOSS number
Registration is carried out through an electronic application to the Italian Revenue Agency (Director’s Provision No. 168315/2021).
Registration may be carried out directly or through an appointed intermediary. An IOSS VAT identification number is issued upon registration.
Non-EU taxable persons without a permanent establishment are required to appoint an EU-established intermediary, except for third countries with a mutual assistance agreement.
The application must be submitted before the commencement of transactions, and the regime takes effect from the date on which the identification number is granted (Article 57-quinquies of Regulation (EU) No. 282/2011).
How and when is VAT declared under the IOSS?
VAT becomes chargeable at the time the payment is accepted (being the earliest of confirmation, authorisation or commitment), and the supply is deemed to take place in the Member State where the goods are delivered (Article 61b of Regulation (EU) No. 282/2011).
Taxable persons applying the IOSS are:
- exempt from invoicing obligations, unless they voluntarily issue an invoice;
- are required to file a monthly return covering all distance sales;
- are required to pay the VAT due at the time of filing (Article 74-sexies.1, paragraphs 10 and 14, Presidential Decree No. 633/1972).
Where registration is effected through an intermediary, the latter fulfils the relevant compliance obligations.
The ViDA reform
The VAT in the Digital Age (ViDA) package aims to make the European VAT system simpler, more secure and better suited to the digital economy, reducing administrative burdens and the risk of fraud.
The reform amends Directive 2006/112/EC and Regulations (EU) No. 904/2010 and No. 282/2011 and is structured around three pillars: harmonised digital reporting requirements (DRR), rules for the platform economy, and a single VAT registration within the EU.
The package entered into force on 14 April 2025; however, only certain measures are currently applicable, while most provisions will be gradually implemented between 2027 and 2030.
In particular, the mandatory extension of electronic invoicing and the full application of the deemed supplier rules are expected in the coming years, following a phased implementation that will allow economic operators to progressively adapt to the new compliance requirements.
