Key Takeaways
- The EU removed the customs duty exemption for consignments valued at €150 or below from 1 July 2026, according to the European Commission’s Taxation and Customs Union guidance.
- A temporary flat duty of €3 applies per item, not per parcel, until 1 July 2028 for low-value distance sales imported from outside the EU.
- The declarant normally pays the duty: that may be the seller, IOSS intermediary, special-arrangements operator, importer, or an indirect customs representative.
- Product Identifiers are voluntary from 1 July 2026 and become mandatory from 1 November 2026, so UK sellers need cleaner product data now.
- From 1 July 2028, normal tariff rates are expected to replace the temporary €3 duty, and the EU Customs Data Hub for e-commerce is due to begin operation.
- UK government guidance says these reforms are EU domestic policy, not a change to the EU-UK Trade and Cooperation Agreement.
What changed on 1 July 2026?
The EU has ended the old low-value duty break. From 1 July 2026, goods in consignments valued at €150 or below no longer benefit from the customs duty exemption when they are imported into the EU from outside the bloc. The European Commission says the change is part of the Union Customs Code reform package and is aimed at low-value e-commerce traffic, where direct-to-consumer parcels have grown faster than customs control systems were designed to handle.
The immediate commercial effect is simple: UK sellers shipping direct to EU consumers must now price, collect, declare, or absorb a duty cost that did not previously apply to many low-value orders. This sits alongside import VAT obligations rather than replacing them. If you already use IOSS for VAT, the order flow may feel familiar, but the duty treatment has changed and the cost model needs updating.
The Commission introduced a temporary flat duty of €3 per item for low-value consignments up to €150. Its official guidance says this temporary duty applies until 1 July 2028. After that date, standard customs duties are expected to apply according to the goods’ tariff classification, country of origin, and any valid preferential treatment.
This is not a UK tariff change. The UK Department for Business, Innovation, Science and Trade says the reforms are EU member-state domestic policy and are not linked to the EU-UK Trade and Cooperation Agreement. That distinction matters because UK sellers cannot treat the issue as a Brexit renegotiation point or assume the UK government can intercede on individual consignments.
How the €3 duty works in practice
The €3 charge applies per item, not per parcel. The European Commission’s FAQ gives a practical distinction: five T-shirts can count as one item for the temporary duty, while a parcel containing one T-shirt and one watch can attract €6 because it contains two different items. That means your commercial impact depends on product mix as much as order value.
For a single-SKU beauty order, the flat duty may be easy to model. For a mixed basket with accessories, replacement parts, samples, and add-ons, the cost can rise quickly. A €24 basket with three different product lines can carry a duty cost that feels disproportionate to the sales value, especially if your margin was built around the old €150 relief.
The measure applies to distance sales of imported goods in consignments up to €150, regardless of whether VAT is handled through IOSS, Special Arrangements, or standard import VAT procedures. The Commission says the duty is normally paid by the declarant. In practice, that could be the seller, importer, IOSS holder, special-arrangements user, postal operator, parcel carrier, or indirect representative, depending on the route and contractual setup.
You should map that responsibility explicitly. If your checkout says “duties paid” but your carrier files as if the consumer will pay on delivery, you have a customer-service problem as well as a customs problem. If your marketplace contract makes the platform importer of record, the operational burden may sit elsewhere, but your landed-price, returns, and listing strategy still need to reflect the new charge.
The temporary duty is also classification-dependent in the sense that items must still be declared properly. The flat amount may simplify the duty calculation until 2028, but it does not remove the need for correct goods descriptions, commodity codes, origin statements, values, and VAT data. For mixed baskets, classify the product families before you decide whether to absorb the duty or add it to the customer price. TariffFlow can help sense-check the commodity-code side before the 2028 switch to normal rates raises the stakes.
What UK sellers should change now
Update your EU landed-cost calculator first. Any UK seller offering delivered prices into France, Germany, Ireland, the Netherlands, Spain, Italy, or other EU markets needs a checkout model that includes the €3 per-item duty where it applies. That model should distinguish between one parcel, one SKU, and multiple product items, because those are not the same thing under the Commission’s examples.
Next, review Incoterms and customer-facing delivery promises. If you sell DDP, the seller normally takes responsibility for import duty and taxes. If you sell DAP, the customer may be asked to pay import costs before delivery. The legal detail should match the checkout wording, carrier service, and invoice data. If your team is still deciding who carries border costs, our DDP vs DAP guide sets out the practical trade-offs for cross-border e-commerce.
Third, clean the product master data that feeds customs declarations. The Commission says Product Identifiers become mandatory from 1 November 2026, with voluntary declaration from 1 July 2026. That gives sellers a narrow window to fix catalogue records, GTINs, SKU hierarchies, item descriptions, country-of-origin fields, and commodity-code mapping before poor data starts causing more clearance friction.
Fourth, audit carrier and marketplace integrations. Low-value parcel flows often run through automated APIs, not manual customs entries. Check whether your carrier label platform can pass the new duty fields, whether it can separate item lines inside a parcel, and whether it can support Product Identifiers by the mandatory date. If a marketplace files declarations on your behalf, get written confirmation of how it is handling the duty and what data it now requires from sellers.
Finally, revisit price architecture. A flat €3 duty may be tolerable on a €120 item and painful on a €9 accessory. Some sellers will raise EU prices, set minimum order values, bundle products differently, or restrict low-margin SKUs from EU delivery. Those choices are commercial, but they should be made against declared-item economics, not an average parcel estimate that hides the worst baskets.
IOSS, Special Arrangements and who pays
IOSS still matters because import VAT still matters. The current reform changes the duty exemption, not the need to handle VAT correctly. If you use IOSS, make sure your VAT process and duty process are aligned; a clean VAT collection route does not automatically mean the temporary duty has been paid by the right party.
Special Arrangements can also remain relevant for postal and carrier-led collection models. The Commission’s guidance states that the temporary flat duty can apply regardless of VAT scheme, so sellers should avoid assuming that one VAT route removes the duty exposure. The operational question is who appears as declarant and who funds the duty before the parcel reaches the consumer.
This is where commercial terms can drift away from customs reality. A UK seller may believe the buyer is responsible because the website uses DAP wording, while the platform or carrier contract puts the duty debit back to the seller. Alternatively, a consumer may be charged at the door even though the checkout implied that taxes and duties were included. Each mismatch creates avoidable support tickets, refused deliveries, and refund disputes.
Create a one-page responsibility matrix for each EU route. Include checkout term, Incoterm, marketplace role, carrier service, declarant, VAT collection method, duty payer, return treatment, and customer messaging. Then test it with real sample orders. The goal is not a legal essay; it is a working control that customer service, finance, and operations can all follow.
The 2028 horizon
The temporary €3 duty is a bridge, not the final system. The European Commission says it runs until 1 July 2028. From that point, normal customs duties are expected to apply to low-value imports based on the type of goods. PwC’s overview of the EU customs reform also notes the proposed removal of the €150 IOSS and Special Arrangements value limit in 2028, which would extend those regimes to imported distance sales above the current cap.
For UK sellers, the 2028 change is the bigger margin risk. A flat duty allows broad pricing rules, even if the commercial impact is uneven. Normal tariff rates require accurate commodity codes, correct origin evidence, and knowledge of any preference available under trade agreements. A product that attracts a low or zero duty rate may remain viable, while a product with a higher MFN rate may need a different EU distribution model.
The EU Customs Data Hub for e-commerce is also due to become operational from 1 July 2028, according to Commission material. Its stated purpose is to streamline e-commerce customs data and improve supervision. Sellers should expect more structured product data, stronger platform accountability, and less tolerance for vague descriptions such as “gift”, “accessory”, or “sample”.
Use the transition period to remove classification debt. That means deciding the correct commodity code for each product family, recording the rationale, retaining supplier origin evidence, and checking whether any rules of origin can support preferential treatment. Waiting until 2028 will turn a data-quality exercise into a live trading problem.
UK-specific considerations
The UK government position is that this is an EU reform with EU effects. Business.gov.uk guidance says the changes are not linked to the EU-UK TCA and that the UK cannot intercede in the EU’s domestic customs policy. UK exporters should therefore treat compliance as a market-access requirement for EU sales, not as an issue likely to be negotiated away before the next peak season.
Northern Ireland needs separate monitoring. The UK government has said Northern Ireland guidance will be published in due course. Until that detail is available, sellers with GB-to-NI, GB-to-EU, and NI-to-EU flows should avoid applying one blanket rule across all routes. Keep route logic separate in your ERP, carrier platform, and customer messaging.
The reform also interacts with UK operators that import from the EU as well as sell to it. Do not confuse EU import rules with UK import duty or UK low-value import thresholds. A UK seller may face one duty model when selling into the EU and a different model when replenishing UK stock from overseas suppliers.
If you use a freight forwarder or customs broker for bulk EU replenishment, ask whether direct-to-consumer fulfilment still makes sense. Some brands may move more stock into an EU 3PL, especially where basket values are low and the per-item duty distorts margins. Others may keep UK fulfilment but narrow the EU catalogue to products with stronger contribution after duty, VAT, returns, and carrier surcharges.
Operating checklist for the next 90 days
Start with data. Export your EU order history by SKU, basket composition, order value, destination country, fulfilment route, and delivery term. Apply a €3 per-item duty estimate to the past three months of orders and identify the products where margin turns negative. That is the quickest way to see whether this is a minor pricing update or a material route-to-market issue.
Then check the customs data behind those SKUs. Each line should have a precise product description, commodity code, country of origin, value, weight where needed, and Product Identifier readiness. The Product Identifier deadline of 1 November 2026 is close enough that catalogue fixes should be treated as operational work, not a future compliance project.
Next, test your checkout and carrier labels. Place trial orders for one single-item basket, one multi-quantity same-SKU basket, and one mixed-SKU basket. Confirm what the customer sees, what the label data shows, who receives the duty debit, and whether the carrier can separate item lines correctly. If any result is unclear, fix the process before peak trading periods expose it at volume.
Finally, update internal guidance. Customer service needs a short answer for EU shoppers asking why delivery prices changed. Finance needs to know where the duty cost appears in accounts. Merchandising needs product-level margin visibility. Operations needs exception rules for refused deliveries and returns. The reform is customs-led, but the fix touches the whole selling process.
Frequently Asked Questions
Did the EU remove the €150 customs duty exemption?
Yes. The European Commission says the customs duty exemption for consignments valued at €150 or below was abolished from 1 July 2026 for relevant low-value imports. Import VAT obligations continue separately, so sellers should not treat the duty reform as a replacement for VAT compliance.
Is the €3 charge per parcel or per item?
It is per item. The Commission’s FAQ explains that five T-shirts can count as one item, while a parcel containing one T-shirt and one watch can attract two €3 charges. Mixed baskets therefore need more careful modelling than single-SKU parcels.
Who pays the temporary duty?
The declarant pays the duty in the normal case. Depending on the sales and logistics model, that may be the seller, importer, IOSS holder, special-arrangements user, carrier, platform, or indirect representative. The consumer should only be exposed where the route and terms genuinely put import costs on them.
Does IOSS still apply after the reform?
Yes. IOSS remains relevant for import VAT on distance sales, but it does not make the temporary duty disappear. Sellers using IOSS should confirm how their intermediary, marketplace, or carrier handles both VAT and the new duty charge.
What happens on 1 July 2028?
The temporary €3 flat duty is expected to end on 1 July 2028, according to European Commission guidance. Normal customs duties are then expected to apply according to the goods’ tariff classification, and the EU Customs Data Hub for e-commerce is due to begin operation.
Is this part of the EU-UK TCA?
No. UK government guidance says the UCC reforms are EU domestic policy and are not linked to the EU-UK Trade and Cooperation Agreement. UK sellers should plan for compliance rather than waiting for a UK-led intervention.