The EU’s long-standing customs duty exemption for low-value parcels ends on 1 July 2026. In its place: a flat €3 duty per item type on every shipment valued at €150 or less. If you sell direct-to-consumer into the EU from outside it, then this affects your pricing, logistics and cashflow.
What is actually happening?
The €150 de minimis customs duty threshold (which has allowed low-value consignments to enter the EU free of duty) is being removed on an interim basis. From 1 July 2026, a fixed customs duty of €3 applies per item type (per HS code line in the customs declaration) to low-value imports.
Critically, this charge applies even where goods would ordinarily attract zero duty, including goods covered by a free trade agreement such as the UK–EU Trade and Cooperation Agreement. The duty is not waived by the IOSS mechanism. IOSS continues to govern VAT collection and filing but the €3 levy sits alongside it at the customs border.
A parcel containing two products with different HS codes will now attract the €3 duty twice as it is per distinct item type. Sellers shipping bundles or mixed-category orders should model this carefully.
What changes in practice?
Pricing: Add at least €3 per item type to your landed cost calculations. For orders containing multiple distinct product categories, multiply accordingly.
Logistics: Talk to your carrier or fulfilment partner now. Understand how the duty will be collected at import and the cashflow implications for your operation.
HS classification: Accurate product classification has always been required for IOSS shipments. From 1 July, errors carry a direct financial consequence per parcel.
VAT base: The €3 duty forms part of the taxable base for VAT, as is the case with any customs duty. VAT calculations at checkout should reflect this.
IOSS itself is unchanged. The simplified monthly VAT return for distance sales of goods with an intrinsic value of €150 or less remains in place. Sellers and electronic interfaces acting as deemed suppliers can continue to collect VAT at checkout and file a single return per month. The €3 duty is an addition, not a replacement.
Timeline
- 1 July 2026: €3 flat-rate customs duty takes effect on low-value imports into the EU.
- 31 August 2026: First IOSS return deadline covering July shipments. Pricing must reflect the new duty before first shipments depart.
- October 2026: EU Commission begins monthly reviews to detect IOSS avoidance patterns, including parcel splitting and undervaluation.
- Late 2026: Potential additional handling and processing fees under consideration (approximately €2 per item type) linked to EU product safety regulations.
- From 2028: Fuller EU customs reforms expected to replace the interim €3 duty regime.
A word on avoidance
From October 2026, the European Commission will conduct monthly monitoring exercises specifically designed to identify businesses restructuring their supply chains to circumvent the €3 duty, whether by abandoning IOSS registration, artificially splitting consignments, undervaluing goods or routing through alternative structures.
Where avoidance patterns are detected, the Commission has signalled it will introduce further legislative changes. Any restructuring must demonstrate genuine commercial substance.
There are legitimate supply chain alternatives worth considering. Where an IOSS registrant is selling extremely low-value goods, in particular items that would not ordinarily attract customs duty, then exploring a B2B2C model (importing into the EU at a wholesale level and applying Union OSS for the onward B2C supply) may be commercially rational. This requires proper planning and substance in any new structure.
What to do now
- Update pricing models to include at least €3 per item type for all EU-destined low-value shipments before 1 July.
- Confirm with your carrier or fulfilment provider how the duty will be collected at the border and the impact on your cashflow.
- Audit your HS code classification data. Accuracy is now commercially critical, not just a compliance checkbox.
- Update checkout landed cost calculations: €3 duty + VAT (calculated on the duty-inclusive value) + any applicable carrier fees.
- Ensure July shipments are priced correctly in advance of the 31 August IOSS return deadline.
- Evaluate whether EU warehousing or adjusted sourcing improves unit economics for high-volume low-value product lines.
- If considering supply chain restructuring, obtain professional advice to ensure any new model has genuine commercial substance.
Tax Desk manages IOSS registrations, monthly filings and compliance reviews across the EU for companies in over 60 countries. Contact us at www.taxdesk.com to discuss how the July changes affect your business.
