EU Tax Reforms May Disrupt Crossborder Ecommerce

Published: 12/31/2025
Cross-border E-commerce Tax Policy Market Strategy
The EU's plan to levy taxes on small parcels signals a potential end to the de minimis threshold era, aiming to address customs supervision challenges and unfair competition. Globally, many countries are also adjusting their de minimis policies. Cross-border e-commerce sellers need to closely monitor policy changes, optimize logistics, adjust pricing, and expand markets. Embracing compliant operations is crucial to thrive in this changing landscape and secure future development.
EU Tax Reforms May Disrupt Crossborder Ecommerce

Imagine 12 million small parcels flooding into the European Union daily—a phenomenon that represents both the boom of cross-border e-commerce and a regulatory nightmare for customs authorities. Now, this "tax-free carnival" may be coming to an end as the EU prepares major reforms aimed at leveling the playing field for businesses.

EU's Proposed Tax Overhaul: Key Measures

The European Commission has unveiled plans to impose fixed fees on cross-border e-commerce parcels:

  • Home-delivered parcels: €2 fixed fee per item
  • Warehouse-delivered parcels: €0.50 fixed fee per item

This would effectively end the tax exemption for small parcels valued under €150. EU Trade Commissioner Maros Sefcovic stated the measures aim to recover customs inspection costs and address regulatory challenges posed by the parcel surge. The policy also responds to EU retailers' longstanding complaints about unfair competition from tax-exempt imports.

Commission data shows EU imports of sub-€150 parcels reached 4.6 billion items in 2024—double the previous year—with over 90% originating from China.

Three Major Policy Changes Planned

  1. Fixed handling charges: Implementation of the proposed fee structure
  2. Elimination of tax threshold: Proposal to remove the €150 tax exemption across member states
  3. New EU Customs Authority (EUCA): Centralized oversight of parcel imports

VAT Process Streamlining: The IOSS System

Alongside tariff changes, the EU is simplifying VAT procedures through the Import One-Stop Shop (IOSS) system. This electronic platform allows suppliers to declare and pay VAT through a single EU portal, reducing administrative burdens for low-value goods (≤€150) shipped directly to EU consumers.

UK Follows Suit: Reviewing Tax-Free Thresholds

The UK has initiated its own review of tax exemptions for low-value imports. Chancellor Rachel Reeves announced plans to examine the current £135 threshold, potentially introducing 20% VAT and up to 25% duties on small parcels.

Global Trend: The End of Tax-Free E-Commerce?

Worldwide, governments are reassessing small parcel tax policies:

  • Brazil: Eliminated $80 exemption in 2023
  • Mexico: Will remove $50 threshold in 2025, adding 19% tariffs and 16% VAT for certain imports
  • United States: Reduced duty rates on Chinese parcels ≤$800 but maintained $100 fixed fees
  • Japan: Planning consumption tax on small imports by 2025

Strategies for E-Commerce Sellers

As tax policies evolve globally, sellers should consider:

  1. Monitoring regulatory changes in target markets
  2. Optimizing logistics to offset cost increases
  3. Adjusting pricing strategies to account for new taxes
  4. Diversifying across multiple markets
  5. Enhancing brand value through quality and service
  6. Prioritizing compliance to maintain market access

Market Diversification: Reducing Risk Exposure

Expanding into multiple markets can mitigate regional policy risks. Key considerations include:

  • Conducting thorough market research
  • Selecting appropriate market entry strategies
  • Implementing localized operations
  • Building in-country teams
  • Participating in international trade events

While these tax reforms present challenges, they also create opportunities for adaptable businesses to differentiate themselves in an evolving global e-commerce landscape.

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