Summary
Summary
The EU’s customs framework is being reformed to address the impact of e-commerce growth on low-value goods. The introduction of the Import One Stop Shop and tax provisions led to a surge in online purchases from outside the EU, creating challenges for customs officials.
The EU’s customs regulatory framework will be significantly reshaped starting next year. The EU Commission proposes the pending reform and has received a decisive vote of confidence from the Council. The primary reason for EU officials’ willingness to modify the current framework is a well-supported need to adjust tax and customs rules for e-commerce.
The introduction of the Import One Stop Shop (IOSS) and the founding tax provision, which enabled the importation into the EU of low-value goods(LVG) shipped from other countries, drove exponential growth in the e-commerce market within the Common Market.
These provisions permitted EU shoppers to purchase products from outside the EU under simplified customs clearance procedures, without paying any customs duties. This inevitably led to the growth of low-value parcel imports, dramatically decreasing B2C purchases in retail stores.
The present situation is transparent and shows that in the EU, there is an uneven playing field between retailers and overseas e-commerce vendors selling low-value goods. The numbers don’t lie; let’s have a short overview of the volume of e-commerce sales under the EUR 150 threshold(consignment threshold for LVG).
Imports – Low-Value Goods
The current framework permits EU shoppers to make online purchases of low-value parcels, shipped from outside the EU, with complete customs relief. VAT is paid at the point of sale, not at the point of import. This administrative benefit for overseas vendors and EU shoppers created an uneven playing field between retailers and online vendors, causing a nightmare for EU customs officials who must handle millions of low-value parcels.
The dream-come-true situation for vendors and EU shoppers is now “seen” more as a nightmare, considering the level of “bad” impact that this spreading spree is causing to the EU economy, sustainability, and environment.
Official reports share the following figures: in 2024, circa 4.6. billion low-value parcels entered the EU, approximately 12 million per day. Compared to 2023, the numbers doubled; compared to 2022, they tripled. In terms of volume, imports “exploded”.
Customs Reform
End of Low-Value Goods Threshold
The EU moves forward with the abolition of the customs relief duty for the import of LVGs. The first version of the proposal is based on a two-phase switch. The first phase is a partial shift that should take effect in 2026, when the customs relief will become obsolete and a simplified calculation system will be implemented, leading to full compliance.
The second (final) stage should be finalized in 2028, when the EU will fully develop the Central EU Customs Data Hub, which will act as a central, unified across-EU data repository where all mandatory data shall be transmitted in real time.
So in a few words, the end of the EUR 150 threshold for LVG imported outside the EU, will:
- Impose customs duties from the first euro for these imports
- No simplified customs clearance
- Supporting a level playing field between retailers and online vendors
- Increase administrative work for customs authorities
- Decrease the LVG imports
- Safeguarding the environment and local economy
- Raise awareness among local shoppers to buy locally
Impact on EU businesses
In recent years, we have witnessed a steady rise in voices from relevant stakeholders highlighting the benefits, particularly for Chinese e-commerce marketplaces, of facilitating the supply of LVG to EU shoppers.
Their products, or products in which they are intermediaries, are being labelled on a perpetual basis as undervalued, unsafe, non-compliant with EU standards, and these supplies result in lower duties and less VAT collected for EU or MS coffers; cause harm to citizens; depreciate the local economy; and raise other issues.
When the LVG threshold disappears, the Chinese marketplaces will be obliged to raise awareness of EU standards, probably establish EU warehouses, and integrate with EU customs systems. This will likely lead to higher prices, driving shoppers to look to local offerings as well.
Parcels on Low-Value Goods
As one of the additional measures to combat the influx of low-value parcels, the EU is considering introducing a “handling fee” on e-commerce parcels. The initial Commission’s proposal speaks about a parcel fee of 2€ per package. France, Romania, and the Netherlands have already explored introducing this fee through domestic legislation.
Takeaway
The idea behind the EU’s Customs reform is to protect the internal market, level playing field between overseas vendors and foreign marketplaces with local retailers, safeguard the EU’s environment and citizens. As we can see over the last months, Member States such as France, Romania, and the Netherlands have already put in place regulatory frameworks to reduce the influx of LVG from outside the EU, and provisions that will require greater compliance work for non-EU vendors.
Author: Aleksandar Delic
Indirect Tax Manager – E-Commerce
Frequently Asked Questions
The EU is abolishing the customs relief duty for low-value goods (LVG) imports starting in 2026. This change will remove the EUR 150 threshold for customs relief, imposing customs duties from the first euro for such imports and increasing compliance requirements.
The EU aims to create a level playing field between retailers and online vendors, reduce the environmental impact of excessive low-value parcel imports, and safeguard the local economy. The reform is also designed to streamline customs procedures and improve compliance.
The reform will be phased in over two stages: a partial shift starting in 2026, with a simplified calculation system, and full implementation by 2028, when the EU Central Customs Data Hub will be fully operational for real-time data transmission.
EU businesses will benefit from a fairer marketplace, as non-EU vendors will be subject to the same customs duties and VAT rules. However, the change may lead to higher prices for low-value imports, encouraging shoppers to consider local options.
The EU is considering introducing a “handling fee” of EUR 2 per parcel to help manage the administrative burden of low-value imports. Some EU countries, like France, Romania, and the Netherlands, have already proposed this fee through domestic legislation.
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