The European Union is introducing significant changes to its customs rules for low-value e-commerce imports. This reform primarily targets the long-standing €150 customs duty exemption (often referred to as the de minimis threshold for duties).
Introduction to the Regulation
Under current EU rules, parcels imported from non-EU countries (third countries) with an intrinsic value of €150 or less are exempt from customs duties. However, they remain subject to import VAT (value-added tax) and require a customs declaration. This exemption has facilitated the rapid growth of direct-to-consumer e-commerce shipments, particularly from countries like China, but has also raised concerns about unfair competition with EU-based retailers, undervaluation, fraud, and the strain on customs systems due to high volumes of small parcels.
The new regulation removes this customs duty exemption. EU Member States reached a political agreement on 13 November 2025 to abolish the €150 threshold as part of broader efforts to modernise the EU Customs Union and level the playing field between e-commerce imports and traditional bulk imports.
Key timeline and interim measures:
- From 1 July 2026, an interim simplified system introduces a flat-rate customs duty of €3 per item (or per line on the customs declaration, based on tariff classification) for low-value consignments (intrinsic value ≤ €150) entering the EU from third countries. This applies particularly to e-commerce distance sales shipped directly to EU consumers.
- The €3 duty is a temporary measure until the full EU Customs Data Hub and reformed customs processes become operational (targeted around mid-2028), at which point normal customs tariffs will apply to all goods without the previous low-value exemption.
- Import VAT rules remain unchanged: the VAT exemption for goods below €22 (previously in place) was already removed in July 2021 under the EU VAT e-commerce package. All imports are now subject to VAT regardless of value, with simplified collection via the Import One-Stop Shop (IOSS) for consignments up to €150 or special arrangements for postal/courier services.
The reform aims to ensure fairer competition, improve revenue collection, and reduce administrative burdens through digitalisation in the longer term. Some Member States may also introduce additional national handling fees for processing low-value parcels.
Note that this change focuses on customs duties; the €150 threshold for simplified VAT collection via IOSS is not directly affected in the interim period, though further reforms (e.g., under the EU Customs reform package) may extend or adjust related processes by 2028.
Quick Before vs After Comparison
| Aspect | Before (until 30 June 2026) | After (from 1 July 2026) |
| Customs Duty (≤ €150) | €0 (exempt) | €3 flat-rate per item/tariff line |
| VAT | Payable on all imports (via IOSS) | Unchanged – still payable |
| Multi-item orders | No duty | Multiple €3 charges possible (different HS codes) |
| Long-term (from ~2028) | Permanent exemption | Full standard customs tariffs apply |
As an e-commerce seller from China, what does this mean for you?
If you sell goods directly to EU consumers and ship parcels from China with a value of €150 or less, your shipments will no longer enter the EU duty-free starting from 1 July 2026.
- Increased costs: You (or your logistics partner) will need to account for the new €3 flat-rate customs duty per item/line. For multi-item orders with different tariff classifications (HS codes), this could mean multiple €3 charges per parcel. Additional national handling fees may apply in certain Member States.
- Higher total landed cost: Combined with existing import VAT (which must already be collected and remitted, often via IOSS), this will raise the overall cost to your EU customers. You may need to absorb some of the duty, increase prices, or clearly communicate the added charges at checkout to maintain transparency and avoid cart abandonment.
- Competitive impact: EU-based or EU-stocked sellers (who do not face these import duties) will gain a relative advantage. Direct-from-China models, popular for low-priced goods, will become less cost-competitive unless you optimise pricing, margins, or shift to alternative fulfilment strategies.
- Compliance and operational burden: Accurate HS code classification, product data (e.g., identifiers), and proper customs declarations become even more critical. Undervaluation or incorrect declarations could lead to delays, penalties, or seizures. High-volume sellers may see more parcels subject to formal clearance rather than simplified postal processes.
- Logistics and delivery: Couriers and platforms may adjust their fees or processes. Delays at the border could increase if data requirements (such as detailed product information) are not met upfront.
What do you need to do next?
- Assess your exposure: Review your current EU sales volume, average order value, product categories (HS codes), and shipping methods. Calculate the potential impact of the €3 duty (and any handling fees) on your margins.
- Ensure accurate product classification: Work with a customs expert or freight forwarder to verify HS codes for all products. Prepare detailed product data, including descriptions and identifiers, as enhanced requirements may apply under the interim and future systems.
- Review VAT compliance: If not already registered, consider enrolling in the Import One-Stop Shop (IOSS) to simplify VAT collection and payment across the EU. This remains available and helps streamline the VAT portion even as duties change.
- Update pricing and customer communication: Decide whether to pass on the new duties via higher prices, absorb them, or offer bundled options. Clearly display total costs (including estimated duties and VAT) at checkout to comply with consumer protection rules and reduce disputes.
- Partner with logistics providers: Engage experienced carriers or fulfilment partners familiar with the new rules. Explore options such as:
- Pre-clearance services.
- Consolidated shipping.
- EU-based warehousing/fulfilment to convert direct imports into intra-EU movements (avoiding import duties altogether for stock already in the EU).
- Monitor official updates: Follow developments from the European Commission’s Taxation and Customs Union Directorate and your chosen courier platforms. The interim €3 duty starts on 1 July 2026, with possible earlier national measures or adjustments.
- Plan for 2028 reforms: Prepare for the full Customs Data Hub rollout, which will further digitise processes and apply standard tariffs without low-value exemptions.
If you’re exporting to Europe, now is the time to review your pricing, supply chain strategy, and compliance processes. Acting early helps yohelps you minimise disruptions, protect margins, and maintain a positive customer experience in the EU market. Many Chinese sellers are already exploring EU fulfilment centres or adjusting their business models in response to these and similar global changes (e.g., in the US and UK).
Have you started preparing for the July 2026 changes? Are you considering EU fulfilment centres?
Happy to discuss.
