The Evolution of IOSS and It's Impact on Low-Value Imports

Since Brexit, the way goods move between the UK and EU has changed significantly. What was once a relatively straightforward process has become far more complex, particularly for businesses operating in the eCommerce space. Where shipping used to be frictionless, there are now layers of compliance, VAT considerations and customs processes to navigate.

One of the key mechanisms introduced to help manage this shift was the Import One-Stop Shop, or IOSS. At its core, IOSS was designed to simplify the movement of low-value consignments (those under €150) by allowing VAT to be calculated and collected at the point of sale. That VAT is then paid directly to EU tax authorities, enabling goods to move through customs more efficiently and reducing delays at the border.

For a time, this created a smoother experience for both businesses and consumers. However, the environment around IOSS is evolving quickly, driven largely by the sheer volume of goods entering the EU, particularly from low-cost overseas marketplaces.

Low price e-commerce platforms have accelerated the flow of ultra-low-value parcels into Europe, placing increasing pressure on customs infrastructure and raising concerns around fairness for EU-based businesses. In response, the EU is tightening its approach. One of the most notable developments is the introduction of an additional per-item charge, expected to be around €3, applied to low-value imports. This new development will be introduced from July 1^st 2026 and is designed not only to cover the cost of processing these high volumes of parcels, but also to help level the playing field for domestic manufacturers and retailers.

From AGL’s perspective, this isn’t just a minor adjustment, it represents a broader shift in how international shipping is being managed. Businesses are moving away from a model built on high-volume, low-value shipments and towards something more structured and considered. As Damon O’Shea, Director of Corporate Operations explains, “What we’re seeing is a change in mindset. Companies are having to think much more carefully about how they ship, how they package goods and how they manage costs.”

We’re already seeing this play out in real time. Some businesses are adapting their packaging strategies to stay within value thresholds, while others are passing additional costs on to customers. Larger eCommerce platforms like Shopify and WooCommerce are building these mechanisms into their checkout processes, making compliance more seamless. However, smaller independent retailers may find this more challenging, particularly without the same level of system integration.

Perhaps the most significant change is the growing move towards local fulfilment. Larger operators are increasingly establishing warehouses within the EU, reducing their reliance on cross-border shipping altogether. It’s a shift that reflects a wider trend, international shipping is becoming more cautious, more controlled, and ultimately more strategic.

Alongside these changes, there is also greater scrutiny around commodity codes, country of origin and the consistent application of tariffs. The days of loosely managed low-value imports are coming to an end, replaced by a system that prioritises transparency and compliance.

At AGL, we work closely with businesses navigating these challenges every day, and what’s clear is that the landscape is only becoming more complex. The margin for error is shrinking, and the importance of getting things right, from pricing to documentation, has never been greater.

IOSS was introduced to simplify trade, but it now sits within a much wider transformation of global eCommerce logistics. As Damon puts it, “International shipping isn’t getting easier – but it is getting smarter.”

For businesses shipping into Europe, the opportunity lies in understanding these changes early and adapting accordingly. Those that take a proactive, informed approach will be best placed to manage cost, maintain compliance, and continue to move goods efficiently in an increasingly regulated environment.