EU €150 Duty-Free Exemption Ends: The New €3 Flat Customs Duty and What It Means for Sellers

The End of Duty-Free Small Parcel Imports

On July 1, 2026, the European Union officially abolished the long-standing customs duty exemption for low-value goods imported via B2C e-commerce shipments valued at €150 or less.

The previous de minimis rule, which allowed an estimated 4.6 billion parcels (growing to 5.9 billion in 2025) to enter the EU duty-free, has been replaced by a temporary €3 flat customs duty per item category. This transitional measure will remain in effect until the full EU Customs Data Hub becomes operational around July 1, 2028, after which regular customs tariffs based on product classification, origin, and value will apply.

Key impacts at a glance:

What Changed on July 1, 2026?

1. The €150 Customs Duty Exemption Is Gone

For years, goods valued at €150 or less could enter the EU from outside the bloc without paying customs duties. This policy, designed for an era of occasional online shopping and less digitalized customs systems, had been increasingly exploited by e-commerce platforms and sellers. The EU Council formally agreed to abolish this exemption on February 11, 2026, with the regulation taking effect on July 1.

The decision was driven by multiple factors:

• Revenue loss: The EU estimated that approximately 65% of low-value imports were undervalued to remain under the threshold, costing approximately €1 billion annually in lost customs revenue.

• Unfair competition: EU-based retailers, required to comply with full tax, customs, and regulatory obligations, faced price disadvantages against non-EU sellers exploiting duty-free access.

• Safety and compliance concerns: A 2025 EU-wide investigation across all 27 member states found that over 60% of low-value e-commerce imports failed to meet EU product safety, labeling, or ingredient standards.

Official EU Statement: "The removal of the customs duty exemption for low-value goods will support a level playing field for EU companies and ensure that imported goods comply with EU safety and environmental standards" .

2. The New €3 Flat Customs Duty

In place of the exemption, the EU introduced a €3 customs duty per item category, effective from July 1, 2026.

Critical rule: Per item category, not per parcel

The duty applies based on HS tariff subheading, not per parcel. This means:

• A parcel containing 5 identical cotton T-shirts (same HS code) → €3 duty (one category)

• A parcel containing 1 T-shirt + 1 pair of shoes + 1 phone case (three different HS codes) → €9 duty (three categories)

The official EU Council example confirms: a parcel with one silk blouse and two wool blouses falls under two different tariff subheadings, triggering €6 in duties (€3 × 2 categories).

Who pays? The declarant of the goods—typically the seller, platform, IOSS registrant, or their indirect representative—is responsible for paying the duty. EU consumers do not pay customs duties at delivery.

3. Additional Cost Layers Beyond €3

The €3 flat duty is only the first cost layer. Sellers should plan for additional charges:

VAT Base Impact: Customs duties increase the VAT base (except for IOSS-registered shipments). This means the duty amount is added to the taxable amount on which import VAT is calculated, creating a compounded cost effect.

Why the €3 Duty Is a Transitional Measure

2026–2028: The Transition Period

The €3 flat duty is specifically designed as a stopgap solution. The EU's comprehensive customs reform, including the centralised EU Customs Data Hub, is not expected to become operational until 2028. With e-commerce parcels doubling annually since 2022 and exceeding 16 million parcels cleared daily in 2025, the EU needed an immediate revenue and compliance mechanism while building the underlying infrastructure for a more sophisticated system.

2028: The Permanent Customs Tariff Regime

From July 1, 2028, the transitional €3 duty will be replaced by regular EU customs tariffs based on:

• The HS tariff classification of each product

• The country of origin (whether the country has a free trade agreement with the EU)

• The value of the goods

The permanent system will apply five simplified tariff tiers (0%, 5%, 8%, 12%, 17%) based on product category [6]. Under this framework, duties will be significantly higher than €3 for most product categories and will vary by product type, making accurate tariff classification a critical cost driver.

What Sellers Need to Know and Do

1. The €3 Duty Is Only the Beginning

For low-value shipments (≤€150), total landed costs now include:

• €3 duty per HS subheading

• Import VAT (destination country rate, 17%–27%)

• National charges (€2 in France and Italy already active)

• EU handling fee (~€2, effective November 2026)

• Forwarder/carrier handling fees

For a single-item parcel with no national charges, this means approximately €3 duty + €3.50–€5.50 VAT + potential handling fees—a minimum 50% cost increase on a €10 item.

2. Accurate HS Classification Is Now a Cost Driver

Because the €3 duty applies per tariff subheading, classifying products correctly has direct financial consequences. A parcel with three different product types pays €9; a parcel with three identical items pays €3. Sellers should:

• Audit all ASINs/items for correct 6-digit HS codes

• Consolidate items into as few tariff categories as possible per parcel

• Ensure commercial invoices clearly identify each item's HS code

3. Product Identifiers Become Mandatory from November 2026

A Product Identifier (PID) will become mandatory for all B2C e-commerce shipments entering the EU from November 1, 2026 [7]. PIDs allow customs authorities to better trace and detect non-compliant goods. Voluntary declaration is already possible from July 1, 2026. Without PIDs, shipments will not clear customs.

4. Consider FBA and Inventory Strategies

For Amazon sellers, the removal of de minimis has significant implications for direct-to-consumer shipments. However, inventory stored in EU warehouses (including FBA) and sold domestically is not subject to import duty at the point of sale—the duty was paid when the inventory entered the EU.

5. Reassess Pricing and Supplier Strategy

The new duty structure means low-value items face disproportionately higher cost increases. A €5 item may now incur €3 duty + €1.60 VAT—a nearly 100% increase in landed cost. Sellers should:

• Recalculate profit margins on low-value EU shipments

• Consider raising average order values to absorb duty costs

• Evaluate whether FCL ocean freight to EU warehouses is now more cost-effective than direct B2C shipments

6. Regulatory Timeline Summary

Frequently Asked Questions (FAQ)

Q1: Is the €3 duty per parcel or per item?

Per item category (HS tariff subheading), not per parcel. A parcel with different products pays €3 for each distinct HS code. A parcel with identical products pays €3 once.

Q2: Does IOSS registration exempt me from the €3 duty?

No. IOSS simplifies VAT collection but does not exempt shipments from customs duties. The €3 duty applies regardless of IOSS registration.

Q3: Who pays the €3 duty—seller or customer?

The declarant of the goods—typically the seller, marketplace, or IOSS registrant—is responsible for paying customs duties to the customs authorities. EU consumers are not required to pay customs duties at delivery.

Q4: What is the Product Identifier (PID) and when is it required?

A PID is a mandatory data field required at line-item level for every B2C e-commerce shipment, helping customs authorities trace and verify product safety. It becomes mandatory from November 1, 2026, though voluntary declaration is possible from July 1, 2026 

Q5: What additional fees apply beyond the €3 duty?

Key additional costs include: Import VAT (17%–27% depending on destination country), national charges (€2 in France and Italy), an EU handling fee (~€2 expected November 2026), and forwarder/carrier brokerage fees.

Q6: When does the €3 transitional duty end?

The €3 flat duty is a temporary measure expected to last until July 1, 2028, when the EU Customs Data Hub becomes operational. After that, regular customs tariffs based on product classification, origin, and value will apply.

Q7: How will this affect sellers shipping from the UK to the EU?

The UK is no longer an EU member. Goods shipped from the UK to the EU are treated as third-country imports and are subject to the new €3 duty rules. UK-based sellers need EU IOSS registration and appropriate customs preparation.

Q8: Why did the EU introduce this change now?

The EU cited three main drivers: revenue leakage (~€1 billion annually lost to undervaluation), unfair competition against EU retailers, and consumer safety concerns (over 60% of low-value imports failed EU compliance testing in 2025)