What Does De Minimis Mean in Trade?
In customs law, "de minimis" (Latin for "about minimal things") refers to a threshold below which goods are exempt from import duties. Every major import market sets its own de minimis value. The US uses $800. The UK currently has a £135 threshold for customs duty relief, though the UK government has announced plans to remove it by 2029. Canada applies different thresholds depending on shipment type and origin. In the EU, the de minimis threshold for customs duty has been €150.
Any shipment entering the EU with a declared customs value of €150 or less was not subject to import duty. Customs authorities processed the parcel, but no duty was charged on the goods themselves.
This did not mean the parcel was free of tax. Import VAT still applied to parcels under €150, collected through the EU's Import One-Stop Shop (IOSS) system for qualifying sellers, or assessed at the point of entry for those outside IOSS. But the duty exemption was significant. For most consumer goods categories, EU import duties range from 4% to 12% of the goods' value, so the exemption represented a real cost advantage for cross-border sellers.
Where Did the €150 Threshold Come From?
The €150 threshold was not designed for modern e-commerce. It was created decades ago to reduce the administrative burden on customs authorities processing low-value personal shipments, the kind a tourist might send home from a trip abroad.
That made sense when low-value cross-border parcels were occasional and low-volume. The rule became a structural problem when global e-commerce scaled up around it.
By 2024, 4.6 billion parcels valued under €150 entered the EU in a single year. More than 91% came from China, largely through platforms like Shein, Temu, and third-party sellers on AliExpress. The European Commission estimates that up to 65% of those parcels were either undervalued to stay under the threshold or deliberately split across multiple packages to avoid duty.
The competitive imbalance was becoming untenable for EU-based businesses, which pay full duties across their supply chains, while foreign sellers shipped direct-to-consumer with no duty liability at all.
How Did EU De Minimis Apply in Practice?
Under the de minimis rule, the process worked like this:
Step 1: Declare the customs value. When a parcel enters the EU, the shipper or carrier submits a customs declaration including the declared value of the goods. For parcels valued at or below €150, the consignment qualified for duty relief.
Step 2: No duty calculated. Customs authorities accepted the declaration and did not apply the applicable tariff rate. The goods were released without a duty charge.
Step 3: VAT collected separately. VAT was still due. EU-registered sellers and marketplaces typically collected it at checkout via IOSS, passing it directly to the relevant tax authority. Non-IOSS sellers had VAT assessed at the border.
The process was straightforward for compliant shippers. The problem was that at 4.6 billion parcels a year, even a small percentage of fraudulent or undervalued declarations represented billions in lost duty revenue. Enforcement at that volume was effectively impossible.
What Changes on July 1, 2026?
The EU Council gave final legislative approval to the new framework on 11 February 2026. From July 1, 2026, the €150 customs duty exemption is abolished. What replaces it is a two-phase interim system, with full duty restoration to follow in 2028.
Phase 1: July 1, 2026 — €3 duty per item category
From July 1, a flat-rate customs duty of €3 applies to each item category in a low-value parcel entering the EU. The EU Council's own language is precise on this: the charge is levied "on each different category of item, identified by their tariff sub-headings, contained in a parcel."
This is not a €3 per-parcel fee. An order containing a phone, a charger, and a case falls under three different tariff sub-headings. That parcel carries a €9 duty charge before VAT is calculated. A parcel with a single product category is charged €3 regardless of how many units it contains.
Correct CN code classification for every product you ship into the EU is now a cost issue, not just a compliance one.
Phase 2: From November 2026 — additional €2 handling fee
From November 2026, an additional €2 handling fee per declaration line is expected to take effect. Combined with the Phase 1 charge, the total reaches €5 per item category for affected consignments.
For a parcel covering three product categories, that is €15 in combined charges. For a low-value parcel priced at €30, that is a 50% cost addition before VAT or carrier fees are factored in.
Phase 3: Full duty restoration from July 2028
The interim flat-rate system runs until July 1, 2028, when the EU Customs Data Hub is due to become operational for e-commerce goods. At that point, the €3 flat rate is replaced by standard tariff rates based on HS code and country of origin, applied from the first euro of a consignment's value. There will be no minimum threshold.
Who Is Affected?
The change affects any business shipping goods valued under €150 into the EU from outside the EU. In practice, the biggest impact falls on three groups.
Direct-to-consumer e-commerce sellers shipping from the US, UK, China, or any non-EU origin. If your average order value is under €150 and you ship individual parcels to EU customers, your landed cost into Europe increases from July 1.
Marketplaces and fulfilment operators handling high volumes of low-value cross-border parcels. Every shipment now requires tariff classification at the CN code level, not just a declared value. The administrative overhead increases significantly.
EU importers and distributors restocking low-value components or accessories from non-EU suppliers. B2B supply chains are affected too, if individual consignment values fall below the standard customs declaration threshold.
Businesses already operating under DDP (Delivered Duty Paid) Incoterms will need to revisit their pricing. The new duty charges are real costs, not optional line items that can be deferred or absorbed by customs authorities.
What Should You Do Before July 1?
Audit your product catalogue for CN codes. Every product you ship into the EU needs a correct CN code (the EU's 8-digit tariff classification code). If you've been shipping under de minimis and haven't been classifying goods at this level of detail, that needs to change. Incorrect classification carries the same penalty exposure as full-value shipments.
Model the landed cost impact per SKU. The €3-per-item-category charge has an uneven effect depending on your average order value and how many product categories you typically ship per parcel. A single-SKU order is affected very differently from a mixed bundle.
Review your DDP pricing. If you offer DDP pricing to EU customers, you are absorbing duty on their behalf. The new flat-rate charges need to be factored into your landed cost model before July 1, not after.
Check your IOSS registration. The de minimis change does not alter VAT obligations — VAT was already due on sub-€150 parcels. But if you were relying on IOSS to simplify VAT collection and never needed to think about duty classification before, the cost picture for each shipment has changed.
