Cross-border e-commerce is reshaping who wins in the EU startup race, and founders who understand the rules are already pulling ahead of rivals with far larger budgets.
Why the rules exist and what they actually do
The EU digital single market aims to eliminate national and jurisdictional barriers to online transactions. That ambition has produced a set of concrete rules that directly affect how small businesses operate. The European Commission announced EU-wide rules to end online discrimination based on nationality or place of residence. For a founder in Warsaw or Lisbon, that means a customer in Berlin or Amsterdam can reach your store without artificial friction.
Cross-border parcel delivery prices are on average 3 to 5 times higher than domestic delivery prices, and around 62% of companies that want to sell online identify high delivery costs as a problem. The EU has responded with targeted regulation to address this gap. Founders who understand this context can build logistics and pricing models that account for the real cost structure, rather than discovering it after launch.
The VAT system that changes everything for small founders
The most powerful tool available to EU-based digital sellers is the One Stop Shop (OSS). Through a single registration in one member state, the OSS and Import One Stop Shop (IOSS) allow businesses to declare and remit VAT for cross-border sales of goods and services within the EU, as well as for imports of low-value goods. This removes the old requirement of registering separately in each country where you sell.
The previous thresholds for distance sales of goods within the EU have been abolished and replaced by a new EU-wide threshold of 10,000 euros. Businesses that do not exceed 10,000 euros in distance sales in a given year do not have to register in the OSS scheme and can continue charging VAT at their usual country of establishment rate. This protects the smallest founders from compliance burdens until they reach meaningful scale.
The adoption rate confirms that this system works. More than 33 billion euros in VAT revenues were collected in 2024 via the EU’s e-commerce VAT systems, a clear sign that the 2021 reforms are delivering on their promise to simplify compliance and support businesses. By the end of 2024, over 170,000 businesses had signed up to the OSS and IOSS frameworks, with a notable increase of more than 20,000 new registrations in the Union OSS alone over the past year.
How compliance becomes a competitive advantage
Most early-stage founders treat compliance as a cost. The data suggests it is better understood as a moat. EU-based businesses, especially SMEs, are subject to stricter regulations than their non-EU counterparts. That sounds like a burden. In practice, it means EU founders who master the framework compete on a level surface, while non-EU rivals face growing scrutiny.
The European Parliament’s July 2025 resolution reflects a growing political drive to strengthen enforcement of existing EU rules on product safety, consumer protection, VAT, and customs, particularly in response to rising volumes of goods shipped directly to EU consumers from third countries. Stricter enforcement of these rules raises barriers for foreign competitors. Founders who already operate inside the framework gain ground when enforcement tightens.
The OSS system was introduced on 1 July 2021 to simplify VAT compliance by eliminating the need for multiple VAT registrations across member states. By centralizing VAT reporting through a single interface in the trader’s country of establishment, the reforms have eased administrative burdens and fostered higher compliance among e-commerce traders.
Expert perspective on the regulatory shift
The EU’s VAT e-commerce package has produced a measurable shift in how businesses approach cross-border digital sales. The OSS mechanism removes one of the historically most cited barriers for small operators: the cost and complexity of multi-country VAT registration. What we are now seeing is that compliant EU-based sellers are in a structurally stronger position as enforcement increases against non-compliant foreign operators. The VAT in the Digital Age package will extend this advantage further, expanding OSS coverage and reducing foreign VAT registration requirements for businesses moving goods across member states. Founders who invest in compliance early are building a foundation that is genuinely difficult for less regulated competitors to replicate. The data from 2024 makes this clear: the system is being used, revenues are growing, and the political direction is toward more rigour, not less.
Industry perspective, VAT and e-commerce compliance professionals in the European Union
The next wave of reform and what founders need to watch
The framework is not static. Following the adoption of the VAT in the Digital Age (ViDA) package in 2025, its phased implementation in coming years is expected to further build on the success of the e-commerce VAT reforms. This will enable hundreds of thousands of e-commerce sellers and businesses to cut their foreign VAT registrations and associated costs, because there is no longer a need to report acquisitions in the destination country via further VAT returns.
On the customs side, change is also accelerating. As part of ongoing EU customs reform, the EU Council has agreed to remove the duty-free entry of goods valued below 150 euros, formerly known as de minimis, to address the surge in low-value e-commerce shipments. On 12 December 2025, the EU Council decided to temporarily impose a 3 euro customs duty on all low-value business-to-consumer parcels of 150 euros or less, starting 1 July 2026.
The removal of the 150 euro customs exemption threshold is set to align customs and VAT treatment of business-to-consumer consignments, further closing loopholes and enhancing fair competition. Once implemented, this measure is expected to improve compliance, reduce fraud, and increase the attractiveness of the Import OSS for businesses engaged in cross-border e-commerce.
Conclusion
Cross-border e-commerce rules in the EU are the most underused structural tool in a small founder’s kit. The OSS makes 27 markets accessible with 1 registration. The ViDA reforms will extend that simplicity further. As enforcement against non-compliant foreign sellers increases, EU-based founders who operate inside the framework gain a real and growing advantage. Cross-border e-commerce compliance is not a box to check. It is the foundation on which durable, scalable European businesses are built. Review your VAT registration status, assess whether OSS applies to your sales volume, and treat the digital single market not as a regulation but as a growth infrastructure.
Discover more about cross-border e-commerce
- EU e-commerce rules: shaping Europe’s digital future (European Commission)
- Report on the application of the VAT e-commerce package for 2024 (European Commission OSS portal)
- EU Parliament resolution on product safety and regulatory compliance in e-commerce (Hogan Lovells, July 2025)
