E-commerce: EU’s EUR 150 customs duty exemption for B2C sales of imported goods is to be abolished and VAT is to be synced

1. What is happening?

The European Commission has plans to abolish the EUR 150 customs duty exemption for so-called “low-value consignments” – typically e-commerce packages consigned from outside the EU to consumers. The abolishment of the exemption was also part of the proposed EU customs reforms as from 1 March 2028, but may now be expected to be implemented earlier than 2028 due to these new plans. In parallel, the European Commission has plans to sync the EU VAT rules with these customs reforms. It has amongst others proposed removing the EUR 150 threshold for the Import One Stop Shop (IOSS) i.e. the single VAT return for B2C sales of imported goods in the EU.

2. What does this mean for e-commerce businesses?

For Customs, the abolishment of the EUR 150 customs duty exemption would mean that all B2C e-commerce sales of packages imported in the EU will as a starting point be subject to customs duties, regardless of their value.

For VAT, these sales will in principle remain subject to VAT, as now is the case. However, the plan to remove the EUR 150 threshold for IOSS would make all B2C sales of imported goods IOSS eligible (and thus eligible for taxation at the point of sale rather than at import). This may simplify operations and improve the customer journey. In addition, it is amongst others proposed to extend the deemed supplier rule for online platforms facilitating these supplies, to make these IOSS eligible as well. A similar extension is proposed for logistics service providers. Lastly, as part of the so-called ViDA initiative, IOSS may even become mandatory for online platforms facilitating B2C sales of imported goods.

As such, e-commerce businesses would have to update their Customs & VAT governance to manage these proposed changes day-to-day. This may for example include implementing new Customs and VAT logic across IT-systems, implementing new Customs & VAT controls in operational processes, as well as updating T&C’s with consumers and/or fulfilment partners.

3. What can e-commerce businesses do right now?

We recommend e-commerce businesses assessing how they are affected by these developments and how these could be synced and integrated with other developments like ViDA, CESOP and DAC7. We will keep track of relevant developments and provide an update if and when the above plans are set forth in a further legislative proposal.

For a discussion on how EU Customs & VAT impacts your e-commerce business, please contact Graeme Payne, Dick Ignacio, Andy van Esdonk or your regular Bird & Bird contact.