Value Added Tax (VAT) Explained
VAT is a sales tax applied to products sold in the United Kingdom (UK). It is charged based on what you buy, meaning the more you consume, the more you pay in VAT.
What Is VAT?
Value-added tax (VAT) is a tax on the value added to a product during its production and distribution. In the UK, the VAT rate is 20%, and it is included in the price of products for UK customers. There are no additional VAT charges for UK customers at checkout.
For customers outside of the UK, VAT is not included in the price and will be removed at checkout.
IOSS (Import One-Stop Shop) and Brexit Changes
Following Brexit, VAT for orders to EU customers is handled differently. The IOSS system was introduced to simplify VAT collection for businesses selling to EU customers.
IOSS allows businesses to collect VAT at the point of sale for orders valued under £125 (€150). This ensures customers won’t face unexpected VAT charges upon delivery.
How IOSS Works
- Applies to orders under £125 (€150).
- VAT is collected during checkout.
- VAT is calculated on the total order value, excluding shipping.
- Orders using IOSS will not incur further charges on delivery.
Important: Orders over £125 (€150) are not eligible for IOSS. In these cases, VAT and any customs duties will need to be paid upon delivery, and taxes are not collected at checkout.
Shipping Options with IOSS Support
Stealthvape offers several shipping options, all of which support IOSS for orders under £125 (€150):
Shipping Method | Delivery Speed | Cost | Details |
---|---|---|---|
Royal Mail | Slowest option | Most affordable | Ideal for non-urgent deliveries. |
DHL eCommerce | Affordable and efficient | Competitive rates | Currently supports Germany, Italy, France, and Spain. |
UPS | Fast and reliable | Mid-range cost | Express service that balances speed and price. |
DHL Express | Fastest option | Most expensive | Best for time-sensitive orders. |
Examples of IOSS in Action
- Order Under £125 (€150), Excluding Shipping: You place an order for products worth £110 and choose Royal Mail with a shipping cost of £15. The total intrinsic value is £110, which falls under the £125 threshold. At checkout, 20% VAT (£22) is added. You pay a total of £147, and no additional charges apply at delivery.
- Order Under £125 (€150), Excluding Shipping: You place an order for products worth £100. With DHL eCommerce shipping costing £10, the total intrinsic value remains below £125. At checkout, 20% VAT (£20) is added, making your total £130. There are no additional charges at delivery because VAT was collected at checkout.
- Order Over £125 (€150): You place an order for products worth £130. Even if the shipping cost is £10, the total intrinsic value exceeds the IOSS threshold. VAT is not collected at checkout. Upon delivery, you may need to pay 20% VAT (£26) plus any applicable customs duties directly to your local customs authority.
- Large Order Exceeding £125 (€150), High Shipping Cost: You place an order for £120 worth of products, but the shipping cost is £20 with UPS. The total intrinsic value remains at £120, which is below the IOSS threshold. At checkout, 20% VAT (£24) is added. You pay £144, and no additional charges apply at delivery.
Currency Converter for IOSS Eligibility
To help you determine whether your order qualifies for IOSS, use the currency converter
- Remember if your order’s intrinsic value exceeds the 150eur threshold, IOSS will not apply.
Visual Guide: How to Check If IOSS Applies
The image below demonstrates how to identify if IOSS has been applied at checkout:

In the image, the section highlighted with the red circle shows that no tax (VAT) has been applied, indicating that IOSS does not apply to this transaction. Conversely, the section with the green circle shows that tax (VAT) has been accounted for, confirming that IOSS is applied for this transaction. This distinction ensures clarity when reviewing your checkout summary.
Comparison Table: IOSS vs. DDU
Feature | IOSS | DDU |
---|---|---|
Customs Fees | Included in checkout | Paid on delivery |
VAT | Prepaid at checkout | Paid on delivery |
Administrative Fees | None | Charged by courier |
Delivery Time | Faster due to prepaid VAT | Slower due to customs clearance |
IOSS Availability and Supported Shipping Options by Country
Countries | IOSS Availability | Shipping Options |
Austria, Belgium, Bulgaria, Croatia, Cyprus | Yes | Royal Mail, UPS, DHL Express |
Czech Republic, Denmark, Estonia, Finland | Yes | Royal Mail, UPS, DHL Express |
France (incl. Corsica) | Yes | Royal Mail, UPS, DHL Express, DHL eCommerce |
Germany | Yes | Royal Mail, UPS, DHL Express, DHL eCommerce |
Greece, Hungary, Ireland, Latvia, Lithuania | Yes | Royal Mail, UPS, DHL Express |
Italy (incl. Sardinia & Sicily) | Yes | Royal Mail, UPS, DHL Express, DHL eCommerce |
Luxembourg, Malta, Netherlands, Poland | Yes | Royal Mail, UPS, DHL Express |
Portugal (incl. Madeira & Azores), Slovakia, Slovenia | Yes | Royal Mail, UPS, DHL Express |
Spain (incl. Balearic Islands) | Yes | Royal Mail, UPS, DHL Express, DHL eCommerce |
Sweden | Yes | Royal Mail, UPS, DHL Express |
Not Covered by IOSS:
Mount Athos, Canary Islands, Faroe Islands, Åland Islands, Greenland, Channel Islands, Campione d’Italia, Italian waters of Lake Lugano, Heligoland, Büsingen, Ceuta, Melilla, Livigno, Antilles, San Marino, Gibraltar, Andorra, Vatican City, French territories (Guadeloupe, French Guiana, Martinique, Réunion, Saint-Barthélemy, Saint-Martin, Mayotte).
Frequently Asked Questions (FAQs)
Q: What happens if my order is over £125 (€150)? A: Orders exceeding £125 (€150) are not eligible for IOSS. VAT and any applicable customs duties will be charged upon delivery by your local customs authority.
Q: Does shipping cost count towards the IOSS intrinsic value threshold? A: No, the intrinsic value is calculated based on the value of the goods only, excluding shipping costs.
Q: Which shipping options support IOSS? A: All of our shipping options support IOSS for eligible orders under £125 (€150). This includes Royal Mail, DHL eCommerce, UPS, and DHL Express. However, DHL eCommerce currently supports Germany, Italy, France, and Spain for IOSS shipments.
Q: Will I be charged VAT if I live outside the EU? A: No, VAT is not collected for non-EU orders. However, your country’s customs authority may charge import taxes or duties upon delivery.
Q: Why can’t I declare a lower value on my order? A: Declaring a lower value is illegal. We electronically submit accurate customs declarations, ensuring compliance and preventing issues with your shipment.
Q: Can I choose not to pay VAT at checkout? A: For orders under £125 (€150) shipped to the EU, VAT must be paid at checkout as part of IOSS. For orders over £125 (€150), VAT is collected on delivery instead.
Summary
- For UK Customers: VAT is included in the product price.
- For EU Customers (Orders under £125/€150): VAT is collected at checkout via IOSS; no additional charges at delivery.
- For EU Customers (Orders over £125/€150): VAT and customs duties must be paid upon delivery.