EU moves to end duty-free advantage for low-value imports

From 1 July 2026, the European Union introduces a major change to its customs system: the elimination of the duty-free exemption for low-value imports, a move primarily targeting the rapidly growing volume of small parcels arriving from Asian online retailers. At the same time, an interim uniform customs handling fee of 3 euros per shipment is set to be introduced, fundamentally reshaping the economics of cross-border e-commerce.

Under the current rules, goods imported into the EU with a value below 150 euros are exempt from customs duties. Although this threshold was originally designed to simplify customs administration, it has increasingly enabled widespread abuse. Exporters frequently undervalue goods to ensure they remain below the limit, or split orders into multiple smaller consignments to avoid duties altogether. These practices are particularly common among high-volume Asian e-commerce sellers, allowing them to offer significantly lower prices than European competitors. EU-based retailers, by contrast, must comply with full tax, customs and regulatory obligations, putting them at a clear disadvantage in price-sensitive segments.

Authorities have long warned that the system not only distorts competition but also results in substantial revenue losses. Due to the duty exemption, the number of low-value e-commerce parcels doubled last year, reaching 4.6 billion, more than 90% of which arrived from China. This massive influx of low-value parcels makes effective control difficult, as customs authorities face significant challenges in verifying declared values on such a large scale.

The reform coming into force is intended to close these loopholes. By removing the duty-free threshold, all imported goods - regardless of value - will become subject to customs procedures. In addition, the introduction of a flat 3-euro customs handling fee per parcel will ensure that even the smallest shipments contribute to administrative costs. Importantly, the financial impact does not stop at customs duties. The changes will also affect value-added tax (VAT), as customs duties form part of the VAT base. In practice, this means that once duties are applied, they increase the taxable amount on which VAT is calculated, resulting in a compounded cost effect for imported goods.

For consumers, the impact will be immediate. The era of ultra-cheap imports may come to an end, as customs duties, the fixed handling fee and the higher VAT base collectively increase the final price of goods ordered from outside the EU. Even low-cost items may become more expensive, and delivery times could lengthen due to expanded customs processing. For businesses, especially international sellers and online marketplaces, the new rules will require adjustments in pricing, logistics and compliance systems. At the same time, European retailers are likely to benefit from more balanced competitive conditions, as the price advantage of duty-free imports disappears.

Overall, the changes reflect the EU’s broader effort to modernize its customs framework in response to the explosive growth of global e-commerce. By tightening controls and introducing uniform charges, policymakers aim to ensure fair competition, improve revenue collection, and create a more transparent system for cross-border trade.