High Risk of Tax Revenue Losses in Cross-Border Mail-Order Sales

Cross-border mail-order sales, and e-commerce in particular, is growing rapidly. According to studies, Austrian consumers’ annual online spending rose to around EUR 11 billion in 2024. Of this amount, 54 per cent – more than EUR 6 billion – went to foreign companies. As a result, the tax relevance of sales generated by foreign mail-order businesses in Austria is also increasing. In 2023, Austria received EUR 1.26 billion in VAT payments relating to purchases made by Austrian consumers from businesses abroad. This represented 3.3 per cent of Austria’s total VAT revenue and was the fifth-highest amount of such VAT payments in the EU. It is therefore becoming increasingly important for Austria’s tax revenue to ensure that reported sales are verified for accuracy and completeness and that businesses failing to report their sales are uncovered. However, sales reported under the One-Stop Shop (OSS) scheme – and thus sales from cross-border mail-order sales – remained largely unaudited. These are some of the findings highlighted by the Austrian Court of Audit (ACA) in its report "E-Commerce: VAT on Cross-Border Distance Selling" (pdf, in German) published today. The audit covered the Federal Ministry of Finance, the tax authorities and the customs offices. The ACA calls for measures to ensure equal tax treatment of all businesses. In particular, this requires risk-based controls and the allocation of adequate resources for this purpose. The audited period spanned the years from 2021 through 2024.

Lack of transparency in VAT assessment

Under the conventional VAT assessment system, businesses engaged in mail-order sales in Member States other than the one in which they are established must declare and pay VAT in each of those Member States. Since 1 July 2021, they have been able to use the EU-wide One-Stop Shop (OSS) scheme instead. This allows businesses to meet their tax obligations towards all EU Member States in a single Member State. The Member State in which a business registers for the OSS scheme (“Member State of identification”) acts as a “collection and payment point”, forwarding VAT payments received to the respective Member State in which the consumer is located (“Member State of consumption”).

Participation in the OSS scheme is voluntary, and businesses may continue to use the conventional VAT assessment system – resulting in a lack of transparency. Across the EU, there is no transparency as to whether, and under which system – the conventional system or the EU-wide OSS scheme – foreign businesses declare their sales. Consequently, there is no basis for comprehensive taxation. It is the responsibility of the Austrian tax administration to ensure that Austria collects the tax revenue to which it is entitled, irrespective of which system foreign businesses choose. 

Risk of tax revenue losses: majority of ACA's recommendations remained unheeded

In its 2021 report "VAT on International Digital B2C Services" (pdf, in German), the ACA had already highlighted a wide range of potential risks and challenges arising from the growth in cross-border mail-order sales and the expansion of the OSS scheme. Although the Federal Ministry of Finance itself had recognized the shortcomings and increasing risks, it largely failed to implement the recommendations aimed at addressing these shortcomings. The shortcomings persisted because insufficient importance was attached to cross-border mail-order sales. 

Safeguarding tax revenue and ensuring equal tax treatment of businesses  

In the ACA’s view, safeguarding tax revenue and ensuring equal taxation require targeted risk analyses, sufficient controls, adequate staffing, clear objectives and the transparent tax registration of mail-order businesses. For example, due to insufficient staff and IT resources, the tax offices conducted virtually no audits of sales reported under the OSS scheme. This lack of audits creates a risk that mail-order businesses may underreport VAT or fail to declare it altogether. The large number of measures that had yet to be implemented, combined with the rapid growth in (online) distance selling, meant that neither equal taxation nor the safeguarding of tax revenue from cross-border mail-order sales could be ensured, potentially resulting in distortions of competition.

Limited oversight of mail-order sales from third countries under the IOSS

The rapid increase in mail-order sales from third countries poses new challenges for tax and customs administrations. For consignments of low-value goods (not exceeding EUR 150), the Import One-Stop Shop (IOSS) was introduced under the OSS scheme as a simplified procedure for VAT purposes. In 2024, 4.6 billion low-value consignments from third countries entered the EU – three times as many as in 2022. The findings showed that mail-order sales from third countries under the IOSS are difficult to monitor. Moreover, the customs duty exemption for goods below EUR 150 is open to abuse and causes competitive distortions. In November 2025, it was decided to abolish the EUR 150 customs duty exemption. The ACA considers its abolition and the swift introduction of customs duties on goods valued at less than EUR 150 to be urgently necessary.

Adequate controls urgently needed

EU-wide measures, including enhanced cooperation, information-sharing and controls, are needed to prevent VAT fraud and the misuse of simplified procedures. In its March 2025 report, the European Court of Auditors likewise found that the existing measures were insufficient to effectively prevent VAT fraud involving imports of goods from third countries.