VAT for E-commerce Businesses in Lithuania: OSS and IOSS Explained

A German customer orders two products from your Lithuanian online store. One ships from a warehouse in Kaunas. The other goes straight from a supplier outside the EU. They appear in the same checkout, but they do not follow the same VAT process.

For online sellers, the first question is not simply “Where is my company registered?” It is where the goods start their journey, where they end it, and who sells them to the customer. Those answers determine whether an order belongs in Lithuania's normal VAT accounting, the EU's One Stop Shop (OSS), or the Import One Stop Shop (IOSS).

OSS and IOSS: the difference in one glance

The European Commission's OSS guidance distinguishes sales between EU countries from goods dispatched directly to customers from outside the EU. Neither scheme turns every transaction made by an online shop into one type of sale.

When does a Lithuanian online store use OSS?

The Union OSS lets a seller report eligible sales to consumers in other EU member states through one tax authority. A Lithuanian store shipping from Kaunas to a private customer in Germany may have to charge German VAT. Instead of registering for these distance sales in each destination country, it can register for OSS in Lithuania, file one OSS return with VMI, and pay the VAT there for distribution to the countries concerned. It must apply the appropriate VAT rate for the goods in each destination country; Lithuania's domestic VAT rates do not set the rate for a sale taxed in Germany. The Commission explains the place-of-taxation rules for distance sales.

For certain small sellers established only in one EU member state and dispatching goods from one member state, an EU-wide €10,000 threshold may keep qualifying cross-border consumer sales taxable where dispatch begins. This is one combined annual threshold across other EU countries, not €10,000 per country. Relevant cross-border sales of goods are counted together with certain electronic, telecommunications, and broadcasting services; the current and previous calendar years matter. A seller can also elect destination-country taxation below the threshold. VMI's e-commerce VAT questions and answers explain the calculation and why the threshold does not apply in every warehousing setup.

Take a Lithuanian store that ships its own goods from Lithuania to consumers in Poland and Germany. If its qualifying cross-border sales exceed the relevant threshold, destination-country VAT generally applies to those sales. OSS is then a way to report that VAT, not an exemption from paying it.

The €10,000 and €45,000 figures answer different questions

Lithuania's €45,000 threshold concerns ordinary domestic VAT registration for qualifying supplies in Lithuania. The EU's €10,000 rule helps determine where certain cross-border B2C sales are taxed. Reaching one does not mean you have reached the other.

One detail often gets missed: VMI says a Lithuanian business can register for Union OSS without first holding an ordinary Lithuanian VAT number. That OSS registration alone does not automatically require ordinary VAT registration in Lithuania. Other activities, such as domestic turnover or particular foreign purchases, may create separate obligations. Our guide to mandatory VAT registration in Lithuania deals with those domestic triggers.

What is IOSS, and when does the €150 limit apply?

IOSS is designed for qualifying consumer goods dispatched from outside the EU directly to an EU customer in a consignment whose intrinsic value does not exceed €150. The seller, or a marketplace treated as the seller for VAT purposes, collects the applicable VAT at checkout and declares it through a monthly IOSS return. Customs receives the IOSS information so the qualifying import is not charged import VAT a second time. Goods subject to excise duties cannot be declared through the import scheme. The European Commission sets out the import scheme's scope.

A Lithuanian store sending a €60 item directly from a non-EU supplier to a French consumer may therefore be looking at IOSS, with French VAT charged at checkout. If that item is imported into the store's Lithuanian warehouse first and sold from there later, IOSS does not apply to that later sale. Nor is IOSS the route for a consignment whose intrinsic value exceeds €150; other import and VAT procedures must be considered. VMI explains what happens to import VAT when IOSS is not used.

There is a separate 2026 cost to watch. Since 1 July 2026, a temporary €3 EU customs duty applies to many distance-sale imports in consignments up to €150, calculated by item category according to customs classification, rather than simply once per parcel. IOSS handles VAT; it does not make this customs duty disappear. The European Commission explains the duty and its exceptions.

What if the business uses an EU warehouse or marketplace?

A warehouse changes the route even if the website and buyer stay the same. Stock stored in Germany and sold to a German consumer is a domestic German sale, not a Lithuanian-to-Germany distance sale. Moving your own goods into another member state, importing stock there, and making domestic sales can also create local VAT obligations that OSS does not replace. If you use a marketplace fulfilment network, find out where it actually holds your stock, rather than relying on the address of your Lithuanian company.

Marketplaces need a second check: in defined circumstances, the platform is treated as the deemed supplier and handles VAT on the consumer sale. Being listed on a marketplace does not automatically shift VAT responsibility away from you. Confirm which entity is treated as the seller for each order and keep the marketplace's transaction reports. The Commission's e-commerce guidance describes when platforms can become deemed suppliers.

Small businesses should also distinguish OSS from the cross-border small-business VAT scheme (SVS) available since 2025. Eligible Lithuanian businesses may apply for a special EX identification and VAT exemption in participating destination countries if they stay within both the EU-wide €100,000 turnover condition and the relevant country's own limit. It has its own conditions and reporting, and VMI says businesses registered for IOSS cannot use this cross-border SVS arrangement. It is not an automatic exemption merely because an online shop is small. See VMI's explanation of SVS in other EU countries.

How are OSS and IOSS reported in Lithuania?

These schemes sit alongside the company's ordinary accounts. Union OSS is reported quarterly; IOSS is reported monthly. Each return and payment is generally due by the last day of the month following its reporting period. Thus, an OSS return for July to September is due by 31 October; an IOSS return for September is due by 31 October. VMI's OSS portal and the Commission's filing guidance explain the filing route and deadlines.

The OSS return does not replace a Lithuanian domestic VAT return where the company has ordinary Lithuanian VAT obligations. Lithuanian VAT returns and i.SAF reporting have their own requirements. Nor is the OSS return a place to deduct input VAT on business purchases. Keep domestic sales, cross-border consumer sales, imports, and business-to-business orders separately identifiable in the bookkeeping. That makes it possible to reconcile the shop's orders, marketplace settlements, refunds, shipping records, and actual VAT returns. OSS and IOSS transaction records must generally be retained for 10 years under the EU record-keeping rules.

If you are building an e-commerce business in Lithuania, the sensible starting point is a map of actual order flows: where each item is stocked, where it ships, where the consumer lives, and whether the store or a marketplace is responsible for VAT. With that information, you can set the right checkout rate and decide which sales belong in Lithuanian returns, Union OSS, or IOSS. BalticIncorp's accounting services can help keep those transactions and filings consistent as the business expands.