End of the €150 Customs Duty Exemption

Executive Summary: What Changes from 1 July 2026? 

Effective 1 July 2026, the European Union will abolish the €150 customs duty exemption for low-value consignments, as formally communicated by the Council of the European Union. From that date, parcels valued at €150 or below shipped from non-EU countries to EU consumers (B2C transactions) will be subject to a transitional €3 customs duty per item or tariff line, while consignments above €150 continue to incur the ordinary Common Customs Tariff. This fixed-rate duty applies only to low-value parcels and is temporary, pending the rollout of the EU Customs Data Hub (expected around 2028), after which standard tariff rules will apply.

The reform constitutes a structural shift in EU cross-border e-commerce. It will directly affect non-EU online sellers, who will need to reassess current business model and pricing strategies to incorporate the new duty charges per item; marketplaces facilitating cross-border sales, which will need to update platform pricing displays, checkout flows and duty/tax disclosures; dropshipping operators, who will need to improve tariff classification and consider parcel consolidation to reduce duty incidence per shipment; and high-volume parcel shippers, which will need to adapt IT systems, data capture and customs declaration workflows to manage the new flat-duty calculation.

1. Abolition of the €150 Exemption: What Is Changing?

Until 30 June 2026, the European Union maintained a €150 de-minimis customs duty exemption for low-value consignments imported from non-EU countries. Under this system, parcels valued at or below €150 were exempt from customs duties, simplifying import procedures for low-value shipments and reducing administrative costs for both authorities and businesses. The exemption was originally intended to facilitate small-scale cross-border trade, particularly for e-commerce transactions, by avoiding disproportionate bureaucratic and financial burdens on minor consignments.

However, the rapid growth in low-value parcel imports over recent years – driven by online marketplaces, direct-from-factory shipments, and rising B2C e-commerce – has highlighted competitive distortions for EU-based businesses. Non-EU sellers were able to ship high volumes of low-cost goods duty-free, creating an uneven playing field and bypassing traditional customs controls.

To address this, the EU will abolish the €150 exemption from 1 July 2026, replacing duty-free treatment for low-value parcels with a transitional €3 customs duty per tariff line / HS Code (B2C transactions from outside the EU). This change is designed to level the competitive landscape for EU operators, ensure fairer treatment across the single market, and modernize customs administration, while retaining a manageable process for low-value consignments until the EU Customs Data Hub becomes fully operational. 

2. How the €3 Transitional Duty Is Calculated 

The new transitional customs duty of €3 applies per relevant tariff line (i.e. per distinct product classification), not per parcel. This means that each distinct product category within a shipment is treated separately: if a parcel contains multiple types of goods, the €3 duty is applied to each tariff line individually. Conversely, multiple units of the same product within the same tariff line are subject to a single €3 charge.

Following the example provided by the Council of the European Union: A parcel contains 1 blouse made of silk and 2 blouses made of wool. Due to their different tariff sub-headings, the parcel contains two distinct items, and €6 in customs duty should be paid.

The duty is fixed, not value-based, and applies only to low-value parcels (≤ €150) shipped B2C from non-EU countries. This approach ensures that customs charges reflect the diversity of goods within a parcel rather than merely the number of parcels shipped. Multiple product types in a single consignment therefore generate multiple €3 duties, providing a clear and predictable mechanism for the transitional period.

3. Who Pays the New Duty? Liability and Collection

Under the current system, low-value B2C consignments from non-EU countries are often cleared with customs duties and VAT collected at delivery, typically via courier services, except when the seller is registered under the Import One-Stop Shop (IOSS), in which case VAT is collected at the point of sale. With the introduction of the new €3 customs duty, the cost of the duty will ultimately be borne by the end consumer.

Regarding the duty collection of the new €3 customs duty, institutional sources do not yet univocally specify which party – seller, marketplace, or importer of record – will be legally responsible for remitting the duty during this transitional phase.

However, as suggested by technical analyses and sectoral commentary in analogy with the planned 2028 customs reform, which envisages a shift of responsibility upstream and the possible designation of platforms as “deemed importers,” the transitional €3 duty could be collected in a similar upstream logic. In this context:

• Non-EU sellers may need to integrate duty costs in pricing or shipping calculations.
• Marketplaces facilitating B2C transactions could be involved in duty collection at the point of sale, managing transactional data and disclosures.
• Importers of record (logistics operators, sellers, or platforms) remain legally responsible for the duty payment under customs law, though practical collection methods could evolve.

In this transitional scenario, the practical consequences would likely include adjustments to pricing, checkout flows, internal compliance processes, and tariff classification. It remains imprecise to what extent the responsibility shift envisaged for the 2028 reform will be applied during the transitional €3 duty period, and we await further precise official communications from European institutions on this matter.

4. VAT, IOSS and the H7 Dataset: What Remains Unchanged?

Import VAT rules for goods entering the EU remain unchanged under the introduction of the €3 customs duty for low-value parcels. Sellers registered under the Import One-Stop Shop (IOSS) continue to report and remit VAT at the point of sale, ensuring compliance with EU VAT legislation, while unregistered sellers or those using traditional postal flows may see VAT collected at delivery by the carrier.

The new €3 customs duty is entirely separate from VAT: it applies per tariff line on parcels valued at €150 or below and is a fixed amount rather than a value-based tax. More broadly, VAT and customs duties differ in their legal nature, regulatory framework, and competent authorities. Importers, marketplaces, and sellers should therefore clearly distinguish duty from VAT in their pricing, invoicing, and customer communications to avoid confusion for both consumers and compliance purposes.

For consignments with an intrinsic value below €150, the customs declaration instrument currently used in EU practice is the H7 simplified declaration. This procedure was introduced to allow a reduced data set for low-value imports, facilitating faster and more efficient customs clearance, particularly in high-volume e-commerce flows. Pending further clarification from EU institutions on its role following the introduction of the €3 customs duty, it can reasonably be assumed that the H7 framework may require technical adjustments to reflect the removal of the duty exemption, while continuing to support simplified processing for low-value parcels.

5. Transitional Period Until 2028: What Happens Next?

As previously outlined, the €3 customs duty on low-value e-commerce parcels is explicitly designed as a transitional measure pending the broader EU customs reform. Its application from July 2026 anticipates structural changes that are expected to culminate with the operational launch of the EU Customs Data Hub in 2028, a central pillar of the reform.

The EU Customs Data Hub aims to centralize customs data submission, enhance risk analysis capabilities, and provide customs authorities with a unified digital infrastructure for monitoring goods entering and exiting the Union. Once fully implemented, this system is expected to replace the flat €3 duty with a more structured framework aligned with standard customs principles.

In particular, the current fixed-amount approach is intended to bridge the gap until the removal of the €150 duty exemption is fully integrated into the reformed customs environment. This will likely entail a return to tariff-based duty calculation, based on classification, origin, and customs value, applied through fully digitalized processes for low-value B2C shipments.

More broadly, the transitional phase forms part of an ongoing customs digitalization strategy aimed at strengthening enforcement, improving transparency in e-commerce flows, and modernizing the EU Customs Union in response to rapidly expanding cross-border trade.

6. Operational Impact on E-Commerce Businesses

The introduction of the €3 customs duty on low-value consignments marks a shift from regulatory reform to tangible operational impact for e-commerce businesses. Although modest in nominal value, the measure alters the compliance landscape for high-volume cross-border trade.

The importance of accurate tariff classification becomes more pronounced. Even under a flat-rate system, correct commodity coding remains essential to ensure proper declaration, risk assessment, and audit traceability. Errors may result in reassessments, shipment interruptions, or increased scrutiny as customs digital controls continue to evolve.

Businesses will face enhanced data management requirements, including more structured collection, storage, and transmission of product-level information. Reliable allocation of value per item and accurate identification of tariff lines will be particularly relevant for mixed-product consignments.

In this context, cumulative duty exposure may become operationally significant. As illustrated by the Council of the European Union, where a single parcel contains goods falling under different tariff subheadings, the €3 duty is applied per relevant tariff line rather than per shipment. Accordingly, a parcel including products classified under distinct headings may trigger multiple €3 charges within the same consignment. For businesses shipping heterogeneous goods, this reinforces the need for precise tariff mapping, product-level data integrity (particularly regarding HS codes), and forward-looking pricing and logistics adjustments.

From a contractual and logistical standpoint, companies may also need to reassess the Incoterms used in cross-border transactions. Greater attention to the allocation of customs responsibilities and cost-bearing mechanisms (e.g., DDP vs. DAP) may become necessary as duty application expands.

If unprepared, operators could experience clearance friction, increased customs scrutiny, and higher cumulative exposure across large shipment volumes.

7. Will This Accelerate a Shift from B2C to B2B2C Models? 

The introduction of the €3 customs duty on low-value parcels is expected to influence strategic supply chain decisions for non-EU sellers and marketplaces, potentially accelerating the move from direct B2C shipments toward B2B2C or intermediary models. While EU legislation does not, at this stage, explicitly mandate precise operational changes, institutional guidance and sector analyses suggest certain practical consequences.

Direct parcel shipments may lose competitiveness, particularly for low-value items, as the duty applies per tariff line, increasing per-unit costs and adding administrative complexity. This diminishes the efficiency of high-volume, low-margin cross-border sales and may incentivize companies to consolidate shipments.

Bulk imports into EU warehouses offer operational advantages. Centralized clearance of larger consignments can mitigate repeated duty exposure, reduce processing time at customs, and optimize inventory management. Firms can achieve lower per-item handling costs and more predictable delivery timelines, particularly for high-turnover product categories. Any changes to the import setup can also affect the VAT registration and reporting structure. A new EU VAT registration or OSS registration obligation could be triggered.

The role of importer-of-record (IOR) entities becomes increasingly important. EU-based IOR structures allow formal compliance with customs and VAT requirements while enabling more efficient clearance, valuation management, and recovery of import VAT on returns. Correspondingly, fiscal representation may become essential for non-EU sellers, providing a local point of compliance and supporting EU VAT registration, filing, and duty reporting.

Collectively, these shifts suggest a trend toward EU-based fulfillment centers. By pre-positioning inventory locally, businesses can limit last-mile duty exposure, streamline logistics, and improve service levels. Following these technical projections, the €3 duty is likely to encourage operational models that emphasize consolidated imports, structured compliance, and enhanced control over cross-border e-commerce flows.

8. How Businesses Should Prepare Before July 2026

With the EU-wide change becoming effective on 1 July 2026, e-commerce operators should take proactive measures to minimize operational friction and financial impact. The following checklist outlines key areas for review and adjustment:

• Review current low-value parcel flows: Identify shipments from non-EU countries valued at €150 or below, including single-item and mixed-product parcels, to assess potential duty exposure.
• Reassess tariff classification accuracy: Ensure all products are correctly categorized under the Harmonized System to avoid repeated duty charges per tariff line and prevent clearance delays.
• Recalculate landed cost models: Incorporate the €3 duty per applicable item into pricing, shipping fees, and cost-to-customer calculations to maintain margin transparency.
• Evaluate consolidated import options: Consider bulk shipments into EU-based warehouses to streamline customs clearance, reduce repetitive duty application, and improve inventory management. A new EU VAT registration or OSS registration obligation could be triggered with this setup.
• Review VAT and IOSS setup: Confirm that VAT collection processes remain compliant under IOSS for registered sellers, and identify how flows of companies that are not IOSS-registered may be affected at delivery.
• Assess importer-of-record structure: Examine whether current arrangements remain efficient under the new duty, and explore EU-based IOR or fiscal representation solutions to optimize compliance and operational efficiency.

Systematic attention to these factors allows companies to mitigate clearance risks and align operations and pricing with the evolving EU regulatory framework.

9. How a Customs Partner like Gerlach Can Support 

Gerlach provides technical expertise to support businesses in adapting their customs and fiscal processes in anticipation of the EU regulatory changes effective from July 2026.We assist clients in reviewing internal procedures, identifying areas where operational adjustments may be required, following the new €3 duty introduction, including:

• Detailed review and validation of tariff classifications low-value shipments
• Planning for potential impacts on customs reporting and duty management
• Fiscal Representation and VAT/OSS registration, including VAT compliance and VAT advisory
• Customs brokerage combined with advisory support

By leveraging our experience, companies can assess future scenarios, align their processes with evolving regulatory requirements, and mitigate operational and fiscal risks associated with low-value parcel imports.

Our customs brokerage and fiscal representation services, combined with advisory support, allow us to guide businesses through all necessary steps – from initial assessment to full operational implementation – to prepare for legislative changes, limit operational impacts, and ensure ongoing, fully up-to-date compliance with applicable EU customs and tax regulations.