Heads Up, The EU is Abolishing the €150 Duty-Free Threshold in 2026
If you ship goods into the European Union, grab a coffee—we have big news.
The EU customs rulebook is getting a major overhaul. The Council and Member States just agreed to remove the €150 customs duty relief threshold for e-commerce imports starting in 2026. This isn’t just a tweak; it’s a fundamental change that transforms how nearly all low-value shipments into the EU will be handled.
At Floship, we know change can be stressful, but it also creates opportunity. Let’s break down exactly what this means for your business, your bottom line, and how you can get ahead of the curve.
👋 So, What Exactly is Changing?
Right now, if you ship a parcel valued under €150 from a non-EU country directly to an EU customer, you collect and remit VAT (often via IOSS), but no customs duties are charged.
That loophole is closing.
The EU commission felt this exemption was unfair. Think about it: a traditional retailer importing goods in bulk pays duties, but the D2C shipment next to it doesn’t. This move is all about leveling the playing field and ensuring fair competition for everyone selling in the EU market. The change is the first achievement of the 2023 Customs Reform, specifically aimed at addressing the “dramatic increase of low-value goods arriving from non-EU countries directly to EU consumers”—the e-commerce boom.
Bottom Line: As of 2026, almost all e-commerce shipments into the EU, regardless of value, will be subject to both VAT AND customs duties.
🗓️ They’re Moving Fast: Key Dates to Watch
The urgency driven by the global boom in e-commerce has pushed EU bodies to act faster than initially planned.
- 2026 Start: The removal of the €150 threshold and the start of duty collection on all goods kicks off much earlier than originally proposed. Get ready for this change early in 2026.
- The “Simple” Interim Solution: From 2026 until mid-2028, the EU is implementing a temporary solution for duty calculation. Why? They need time to build their high-tech solution.
- 2028: The Big Data Hub: The long-term plan involves the EU Customs Data Hub taking over in mid-2028, which will provide the permanent, sophisticated functionality for duty calculations.
🎯 E-commerce Action Plan: 5 Steps to Prepare for 2026
This change requires e-commerce businesses that ship low-value goods from outside the European Union (EU) to EU consumers to take several strategic and operational actions now.
1. Re-evaluate Pricing and Cost Structure 💰
The most immediate impact is the introduction of a new cost for imports previously exempt from duty.
- Calculate the New Cost: You must determine the specific customs duty rates for all products sold that fall under the new threshold. This rate depends on the product’s Harmonized System (HS) code and its country of origin.
- Update Pricing Strategy: Decide how to absorb or pass on the new cost. Businesses may need to slightly increase their retail prices to maintain margins or adjust their shipping fees to cover the duties.
2. Implement Delivered Duty Paid (DDP) Shipping 📦
To ensure a smooth customer experience and prevent delivery delays, businesses should shift to a DDP model where duties are handled upfront.
- Offer DDP as Default: Move away from Delivered At Place (DAP) or Delivered Duty Unpaid (DDU), where the customer pays duties upon delivery. DDU shipments often result in parcels being held by customs, leading to frustration and abandoned orders.
- Integrate Duty Calculation: Use third-party customs software to accurately calculate the duties (and existing VAT via IOSS) at the checkout stage. This provides the customer with a guaranteed final price.
3. Update IT and E-commerce Platforms 💻
Your shopping experience and back-end systems must be updated to handle the new tax landscape.
- Configure Checkout: Ensure your checkout is programmed to apply the correct customs duty based on the shipping destination, product category (HS code), and value, alongside the existing VAT obligations (IOSS).
- Data Transmission: Prepare logistics data to include all necessary customs details, such as the product’s HS code and an accurate Customs Value, to ensure electronic customs declarations are correctly filed.
4. Enhance Customer Communication and Transparency 🗣️
Clear communication is crucial to manage customer expectations and minimize confusion about the total cost.
- Clear Messaging: Add clear notifications on product pages, FAQs, and the checkout page explaining that the final price includes all customs duties for EU customers.
- Manage Perception: Proactively explain that this change is due to a new EU regulation, not a price hike by the company, to maintain customer trust.
5. Review Fulfillment Strategy (Long-Term) 🏭
For high-volume sellers, the increased complexity and cost of duties may make an EU presence more attractive.
- Consider EU Warehousing: Evaluate the viability of storing inventory in an EU-based warehouse. Shipping goods from within the EU avoids customs duties entirely and significantly simplifies the fulfillment process, offering faster delivery times.
- Utilize IOSS: Ensure continued compliance with the Import One Stop Shop (IOSS) system for VAT collection. Correct use of IOSS will remain essential, especially as it may be expanded to align with the new duty rules.
🚀 Floship: Your Essential Partner in the New EU Customs Regime
The shift to mandatory duty collection on all imports is an operational challenge. Floships ensure you turn this complexity into a competitive advantage.
- Automated Landed Cost Calculation: We provide the technology to calculate Duty & VAT from the first Euro instantly, ensuring guaranteed DDP pricing for your customers.
- Seamless Integration: We manage the dual compliance of IOSS for VAT and the new duty requirements, freeing you from administrative headaches.
- Strategic EU Fulfillment: Utilize our EU warehouses to bypass customs procedures entirely, offering duty-free, domestic shipping speeds.
Ready to make your move?
The clock is ticking for 2026. Start planning your new EU customs strategy today.
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