The European Union has fundamentally altered the landscape of global e-commerce by eliminating its long-standing "de minimis" value thresholds for imports. As of 1 July 2021, the €22 VAT exemption for low-value parcels was abolished, meaning all goods imported into the EU are now subject to VAT. Building on this, the EU is now moving to scrap the €150 customs duty exemption, a change that will impact the final landed cost for a vast number of products. This major policy shift aims to level the playing field for EU businesses, combat tax fraud, and modernise customs processes. To manage this new system, the EU introduced the Import One-Stop Shop (IOSS), a platform designed to simplify VAT collection for non-EU sellers.

What is the EU's removal of de minimis?

The European Union has removed its de minimis value threshold for VAT, which was previously €22. This means that from 1 July 2021, all goods imported into the EU for sale are subject to Value Added Tax (VAT), regardless of their price. The EU is also in the process of eliminating the separate €150 threshold for customs duties as part of a wider customs reform. The main goals of this change are to ensure fair competition for EU-based sellers, reduce VAT fraud from undervalued shipments, and simplify the import process through new systems like the Import One-Stop Shop (IOSS).

Navigating the New Normal: A Deep Dive into the EU's De Minimis Removal

The world of international e-commerce has undergone a seismic shift. The European Union, in a landmark move to modernise its customs and tax regulations, has officially removed the de minimis value threshold for VAT on imported goods and is now phasing out the exemption for customs duties. This decision has profound implications for online retailers, marketplaces, and consumers who engage in cross-border trade with the EU.

Why the Change? Levelling the Playing Field and Combating Fraud

For years, the "de minimis" rule allowed goods valued below certain thresholds to enter the EU without incurring VAT or customs duties. The primary thresholds were €22 for VAT and €150 for customs duty. However, the explosion of e-commerce rendered these rules outdated and unsustainable.

Official sources from the European Commission highlight several key drivers for the reform:

Unfair Competition: EU-based businesses were at a distinct disadvantage. They were required to charge VAT on all sales, while non-EU sellers could export goods under €22 to the bloc tax-free, giving them an unfair pricing advantage.
Widespread Fraud and Revenue Loss: The system was frequently abused. High-value items were often intentionally undervalued on customs declarations to avoid VAT. The European Commission estimated this practice was costing EU member states billions in lost tax revenue annually.
Overburdened Customs Authorities: The sheer volume of low-value imports placed an immense strain on customs authorities, making effective oversight and risk prevention nearly impossible. The reform gives customs a clearer view of goods entering the EU, enhancing consumer protection against unsafe or non-compliant products.

The New Framework: VAT on Everything and the IOSS Solution

The first major change took effect on 1 July 2021, with the abolition of the €22 VAT de minimis threshold. Now, every commercial good imported into the EU is subject to VAT, and all shipments require a formal customs declaration.

To prevent this change from creating logistical chaos, the EU introduced the Import One-Stop Shop (IOSS). This electronic portal is a game-changer for simplifying compliance for consignments up to €150.

How IOSS Works: The IOSS allows sellers to register in a single EU member state to declare and pay VAT for all 27 member states. Upon registration, they receive a unique IOSS number to include in customs data.
VAT at the Point of Sale: The system enables sellers to collect the correct VAT from the customer at the time of purchase, based on the destination country's rate.
A Seamless Customer Experience: Because VAT is paid upfront, consumers face no surprise fees or taxes upon delivery. This transparency also leads to faster, "green lane" customs clearance.

For businesses that opt not to use IOSS, VAT is collected at the border by the customs declarant, for example a postal operator or courier. This can lead to delays and additional handling fees for the customer.

The Next Frontier: Abolishing the €150 Customs Duty De Minimis

Building on the VAT reform, the EU has now committed to removing the €150 de minimis threshold for customs duties. This change is a core component of the EU's ambitious customs reform package, which aims to create a centralised EU Customs Data Hub. This digital platform will streamline data submission for traders and provide authorities with real-time oversight of supply chains.

While the full implementation is tied to the launch of this data hub, expected around 2028, this move will further impact the landed cost of goods. It requires non-EU sellers to re-evaluate their pricing and shipping strategies for the European market.

De Minimis in the EU: Old vs. New

Feature	Old Rules (Pre-1 July 2021)	New Rules (Post-1 July 2021 & Forthcoming)
VAT Exemption	Goods valued up to €22 were exempt from VAT.	Abolished. All imported goods are subject to VAT, regardless of value.
Customs Duty Exemption	Goods valued up to €150 were exempt from customs duty.	Being Abolished. The €150 threshold is being removed, with full implementation expected around 2028.
VAT Collection	VAT on goods over €22 was typically paid by the consumer upon importation.	For consignments up to €150, sellers can use the IOSS portal to collect VAT at the point of sale.
Customs Process	Simplified declaration for low-value goods.	All imports require a full customs declaration. IOSS shipments are fast-tracked as VAT is pre-paid.
Impact on Consumers	Risk of unexpected fees and delays for goods valued over €22.	Price transparency at checkout from IOSS-registered sellers. No surprise fees.
Impact on Businesses	Non-EU sellers had a pricing advantage on low-value goods.	Creates a level playing field for EU and non-EU sellers. Requires system changes to manage VAT collection.

The Road Ahead: A More Digital and Unified Customs Union

The removal of the de minimis thresholds is more than a tax adjustment; it is a fundamental restructuring of the EU's approach to global e-commerce. For businesses, adapting to these changes by integrating systems like IOSS is no longer optional but essential for success in the EU market. For consumers, it signals an end to the gamble of import fees, leading to a more transparent online shopping experience. This bold reform positions the EU to better manage the digital trade era, ensuring fairness, efficiency, and security in one of the world's largest markets.

The End of an Era: How the EU's De Minimis Removal Reshapes Global E-commerce