The end of the EU’s €150 customs duty exemption: What cross-border sellers need to know

• From 1 July 2026, the EU is abolishing the “de minimis” customs duty relief — the long-standing rule that lets low-value consignments enter the EU free of customs duty. “Low-value” means an intrinsic value of €150 or less, and intrinsic value counts the price of the goods alone (not shipping, insurance, or other fees).

• In its place, a temporary €3 customs duty applies per item on qualifying low-value consignments sold in distance sales to EU consumers. It is expected to run until 1 July 2028.

• The €3 duty is charged on businesses (the seller, importer, or their representative) not collected from consumers at the door.

• New product identifier (PID) data becomes mandatory from 1 November 2026 (and can be supplied voluntarily from 1 July 2026).

• Sellers should review pricing, Incoterms, and customs data readiness now, and confirm with their carrier or customs broker exactly how their parcels will be declared.

Under the rules in place until 30 June 2026, goods imported into the EU in a consignment with an intrinsic value of €150 or less were exempt from customs duties. Intrinsic value is the price of the goods themselves — shipping, insurance, and other charges don’t count towards the €150, provided they’re shown separately on the invoice (more on this below). Import VAT is separate: the VAT exemption on low-value imports was removed back in 2021, so all goods imported into the EU are already subject to VAT regardless of value.

As of 1 July 2026, that customs duty exemption has ended. In its place, the EU introduced a temporary flat €3 customs duty per item on qualifying consignments valued at €150 or less, under Council Regulation (EU) 2026/382. The €3 flat duty is a transitional measure: it applies until 1 July 2028, when the EU Customs Data Hub for ecommerce is expected to come online and normal customs duties, based on each product’s classification, will apply instead.

According to the European Commission, around 4.6 billion low-value consignments worth €150 or less entered the EU in 2024, which is roughly 12 million parcels a day and twice as many as the year before. The commission has said that figure rose to almost 5.9 billion items in 2025. The original exemption was designed to spare customs authorities the administrative burden of processing duties on small parcels. With customs procedures now digitised and electronic data available for every shipment, the commission considers the exemption no longer justified and a competitive disadvantage for EU sellers who do pay duty.

Separately, EU-wide inspections carried out across all 27 member states in 2025 — covering cosmetics, personal protective equipment, food supplements, toys, and electronics — found that over 60% of checked low-value imported products failed EU safety standards due to missing labels, forbidden ingredients, or absent safety documentation. The commission has cited this as a further reason to end duty-free treatment for low-value imports.

A few points are worth being precise about because they’re easy to get wrong.

The €3 is charged on the business, not the consumer. The commission is explicit that this is a customs duty owed by the declarant (typically the seller, the importer, the IOSS holder, or their indirect representative) and not a tax collected from the buyer at delivery.

It applies to distance sales of imported goods up to €150, across VAT schemes. The commission’s guidance states the €3 duty applies to goods in consignments up to €150 sold in distance sales to consumers “regardless of VAT scheme (IOSS, Special Arrangements, or standard VAT).” In other words, using or not using the Import One-Stop Shop (IOSS) does not by itself determine whether the €3 applies.

The €150 threshold is based on “intrinsic value.” This is an important term to understand. Intrinsic value means the price of the goods themselves and nothing else — it does not include shipping or transport costs, insurance, or any other taxes, duties, or fees, as long as those are shown separately on the invoice. So, a product priced at €140 with €20 shipping has an intrinsic value of €140, not €160, and stays within the €150 threshold.

There are two situations where the €3 flat duty does not apply:

• B2B imports to VAT-registered recipients. For business-to-business consignments going to a VAT-registered recipient, standard duty rates apply rather than the €3 flat duty.

• Certain free trade agreement (FTA) goods — but with an important condition. Goods that qualify for preferential treatment under a free trade agreement or customs union measure can keep their preferential (often reduced or zero) duty rate only if the VAT has not been collected through IOSS and the goods are declared using the standard H1 customs declaration. If the same FTA-origin goods are sold under IOSS, the €3 flat duty applies instead. This asymmetry catches sellers out, so it’s worth checking which path your shipments actually take.

Returns are an area where the removal of the duty exemption creates additional complexity, particularly for fashion, footwear, and electronics retailers who see high return rates.

Under the previous regime, returned goods that have paid customs duty may qualify for a duty refund (known as “drawback” or re-importation relief). Now, as more low-value consignments become dutiable, sellers and their logistics partners should confirm with their customs broker whether returned goods are eligible for duty recovery — and what documentation is required to claim it.

The commission describes the duty as applying per item in a consignment, based on tariff classification rather than quantity. Its own worked examples:

This is widely summarised in the trade press as “€3 per unique HS code.” That shorthand captures the intent, but it’s important to be careful, because the precise mechanism depends on how goods are declared.

The duty applies per item line on the customs declaration. Goods that share the same tariff classification (and description, and origin where required) can be grouped onto a single line — which is what produces the “5 T-shirts = €3” result. But grouping is generally a choice made at declaration, not an automatic outcome. As FedEx notes, the €3 is applied per each line of the customs import declaration, which can contain one or more items depending on the tariff classification. If identical goods are split across several declaration lines, the charge can apply per line rather than collapsing into a single €3.

The practical takeaway: don’t assume identical products always result in one €3 charge. Consistent, accurate tariff classification, product descriptions, and origin data make grouping possible and confirming with your carrier or broker how your consignments will actually be declared is the only way to know the charge in advance.

For every product in a consignment of €150 or less (apart from B2B VAT-registered imports), the shipper will need to supply a set of new product identifiers. There are three:

• A merchant identifier — the code you use internally to identify the product, such as your SKU or item number.

• A non-standardised manufacturer identifier — a code the manufacturer or supplier assigns to that specific product.

• A standardised manufacturer identifier — where the product carries one, an industry-standard code such as a barcode, which stays the same no matter which retailer is selling the product. 

These product identifiers (PIDs) can be supplied voluntarily from 1 July 2026 and become mandatory from 1 November 2026. Your customs broker or carrier submits them to the authorities at the time of import, so they need to flow from your systems into the declaration.

Low-value consignments currently use the H7 simplified customs declaration dataset — a reduced dataset introduced to make high-volume, low-value import processing more efficient. With the removal of the duty exemption, the H7 framework is expected to require technical adjustments to support the new €3 duty calculation, while continuing to facilitate simplified processing for consignments below €150.

If your systems or carrier workflows are built around H7 declarations, check with your customs broker that their processes have been updated to reflect the new duty requirements.

Separately from the €3 duty, the European Commission has proposed an EU-wide handling fee on low-value goods to help cover customs processing costs. This is a proposed measure, not yet adopted: the commission has said the amount and start date are to be determined in autumn 2026. Some individual member states have also signalled their own national handling charges. None of this is finalised, so treat it as something to watch rather than to build into your pricing today.

With the exemption gone, far more low-value parcels become dutiable and subject to full customs formalities. Duty has to be calculated, declared, and paid, and getting it wrong can mean delays, rejected shipments, or penalties.

Practically, this pushes sellers to revisit a few things. Pricing and Incoterms come first: decide whether you’ll continue with Delivered at Place (DAP), where the buyer settles import charges on arrival, or move to Delivered Duty Paid (DDP), where you or your partners handle duty up front for a smoother customer experience. Business models built around very cheap parcels may need to absorb or rebuild the new cost into the goods price, shipping, or checkout total. And because every parcel now faces the same customs regime as higher-value goods, authorities will expect higher-quality data — accurate HS codes, country of origin, declared value, and seller/shipper EORI numbers. As with the EU’s ICS2 requirements, vague item descriptions won’t be enough.

Two operational points are worth flagging for anyone managing carrier workflows or cross-border logistics:

• As of 1 July 2026, every B2C shipment valued at €150 or less requires its own item-level customs declaration, regardless of whether the seller uses IOSS.
• Non-IOSS B2C shipments must clear customs in the destination member state — they cannot be cleared centrally and then moved onward. This affects delivery routing and timing.

If you work with third-party carriers or fulfilment providers, confirm how they plan to handle declaration workflows under the new regime.

It’s a fair question, given the timing. The U.S. removed its $800 de minimis exemption in 2025, and the EU’s move is part of the same broad direction of travel: major economies tightening the treatment of low-value imports, pulling more parcels into formal customs processes with more data and more compliance obligations. The EU has framed its own reform primarily around levelling the playing field for compliant sellers and improving product safety and oversight, rather than as a direct response to any single country.

Audit your cross-border flows. Take stock of your countries of origin, value bands, HS codes, shipping services, and fulfilment models. Identify which shipments rely on the current €150 exemption and how many become dutiable. Check who acts as importer of record across your sellers, marketplaces, fulfilment providers, and carriers, and understand how liability shifts.

Review pricing, Incoterms, and shipping models. Decide between DAP and DDP, work out how duty costs are built into your prices, and consider whether consolidating shipments or changing fulfilment locations makes sense.

Get your data ready. Make sure your systems capture and apply accurate HS codes, country of origin, EORI numbers, value declarations, and the new product identifiers. If you sell through marketplaces, confirm who carries customs liability and that their systems support the required data. If you use IOSS, work through how the customs duty regime interacts with your VAT compliance.

For businesses shipping high volumes of low-value goods directly to EU consumers, the €3 duty per item can accumulate quickly — particularly for mixed-product consignments where multiple tariff lines trigger multiple charges.

One strategy gaining attention is shifting from direct B2C shipment models towards bulk imports into EU-based warehouses. Consolidating inventory in the EU means goods clear customs once as a larger commercial shipment (subject to standard duty rates), rather than as individual low-value parcels subject to the €3 charge on every delivery. Before going down this route, there are compliance implications to consider:

• Holding inventory in an EU member state can trigger a new VAT registration obligation in that country — or an OSS registration if you’re selling across multiple EU markets.
  
• Your importer of record (IOR) structure may need to change, and fiscal representation may become necessary if you’re a non-EU seller.

Avalara can help you understand the VAT and customs registration implications before you restructure your fulfilment model.

If you sell into both the EU and the U.K., it’s worth understanding that the two regimes work differently — and the EU reform does not affect U.K. rules.

The U.K. maintains its own low-value import threshold of £135. Goods imported into the U.K. in a consignment valued at £135 or below are not subject to U.K. customs duty, but U.K. VAT applies at the point of sale (collected by the seller or marketplace). This threshold has not changed as a result of the EU reform.

So, if you ship a parcel worth €120 to a customer in Germany, the €3 EU customs duty applies (from 1 July 2026). If you ship an equivalent parcel to a customer in the U.K., U.K. customs duty does not apply, but U.K. VAT does.

The two regimes share the same underlying logic — moving VAT collection upstream to the seller — but they differ on the duty side. Sellers operating across both markets need to track each separately. 

The removal of the €150 customs duty exemption is a significant shift for cross-border ecommerce, global sellers, marketplaces, and fulfilment operations. It moves the EU to a world where every parcel, regardless of value, is subject to customs duty — and where data quality and automation matter more than ever.

Avalara cross-border tax automation can help with duty calculation, item classification, origin determination, ensuring catalogues are fully classified with corresponding HS codes, and with tracking duty liability by parcel or shipment. By integrating with your systems, you can calculate duty at checkout and give customers a clearer, more transparent buying experience. Avalara can also support reporting and auditing for customs and VAT compliance, so that as more consignments become dutiable, you have the records to back up your customs position.

Speak with Avalara about support for your customs duty and VAT compliance.