Starting 2026, European citizens will have to pay more for small parcels they receive for purchases made through third-country platforms.
EU finance ministers agreed last week that from the new year, customs duties will begin to be imposed on parcels valued under €150 as well. This is by no means a negligible number of parcels. In 2024 alone, approximately 4.5 billion low-value items were imported into the EU, according to a report published last February.
The main aim of this measure, Panos Chatzipanagiotou, professor of economics at the Department of International and European Economic Studies at the Athens University of Economics and Business, told Phileleftheros in an interview, is to address the mass influx of small parcels, mainly from China, which currently are not subject to customs duties upon entry into the EU—a phenomenon that leads to unfair competition for European businesses whilst also raising environmental concerns.
The new measure is expected to close loopholes that have been systematically exploited to avoid customs duties by e-commerce giants such as Temu and Shein. It will also reduce opportunities for fraud and strengthen the integrity and transparency of trade within the single market. However, whether this is sufficient to reduce purchases from third countries is something that will become apparent in the future, although there are considerable doubts about this, since, as Panos Chatzipanagiotou explained, many of these purchases are made by young people because it is trendy and not because they are cheaper.
Now, businesses and consumers are beginning to weigh up the pros and cons of the new developments. However, the transition to a regime of full customs control may bring delays and problems at customs, which require adaptation and timely upgrading of customs information systems.
What exactly does the European Union’s decision mean that from early 2026 customs exemption for small parcels under €150 will cease?
Until now, imports of products into the EU from third countries with a value below €150 were exempt from customs duties, although they were subject to customs procedures. The reason for the exemption was primarily that the cost of customs handling these micro-shipments exceeded the expected customs revenue. Of course, from the moment these products entered EU countries’ markets, they were liable for VAT in those specific markets. The EU has decided that the exemption for packages valued under €150 will be abolished and that the implementation date of the new regime will take effect within 2026. In this case, these micro-shipments of products from third countries will be under both tariff and customs burden, as well as under the applicable VAT taxation regime of the EU countries’ markets to which they are destined.
The main reason for this change is primarily the fact that there is a huge wave of low-cost imports from third countries, especially from China, with the aim of avoiding tariff burdens. This practice by third countries is perceived as “unfair competition” towards EU businesses, which produce similar products at higher cost, and which were “exploiting” the €150 threshold to avoid duties. With the new regime now in place, businesses and individuals importing goods, especially e-commerce businesses, must harmonise with the new rules for importing products from third countries into EU markets and bear the cost of duties and customs procedures from which they have, until now, been largely exempt.
What were the reasons behind this decision?
Nowadays, international trade has moved into the sphere of e-commerce. It became clear that different provisions needed to be created to manage it. For various reasons, we have a huge surge in e-commerce. One reason is that there is immediacy of contact and consequently this immediacy is very low cost. A business does not need to run any particular campaign to promote its products or services. A second reason is that e-commerce has helped reduce the production cost of many products. Platforms like Shein or Temu use algorithms that adapt to consumer preferences. If I search for a product, in the following days I will be bombarded with related custom-made advertisements that concern me to a very large degree. This enables producers, businesses in commerce, with a fairly manageable cost, to adapt their production and products to consumer demands. And let’s not forget the opportunity given to small and medium-sized enterprises worldwide to develop export activity.
Do we have data on how many small packages are imported and what the cost is to the EU?
It is estimated that small packages from third countries to the EU currently amount to 4.5 billion annually. If we take into account that an average cost for a package amounts to around €20 to €30, then we can calculate that for the EU the volume of this trade exceeds €2.5 billion per year. We can therefore also consider how large the fiscal losses are. There are no official figures for the exact amount. We know that the majority of these packages come from China, so in essence China has until now been entering European markets, somehow bypassing the duties and taxes imposed by the EU. Therefore, an issue of unfair competition also arises, taking into account that European businesses producing similar products are burdened with the relevant charges.
Will there be a single fee for all small parcels imported under €150 or will it be according to their value?
My reading is that there will be a charge of €2 for each small package. An amount imposed on the basis that regardless of the fact that they are small parcels, due to the volume that exists they create a very large bureaucratic burden, since in any case they must pass through borders, through customs, be registered… This fee will be paid when the consumer receives their package and this will happen after this product has been cleared through customs. So it is a cost not of the country sending it or the producer but of the person receiving it and in the country where the small package arrives.
In what way do you believe e-commerce will be affected? Will the fact that small packages will become more expensive stop European consumers from buying from these specific platforms?
A cost-benefit issue arises. Yes, the price of these products will be increased, even by €2 or perhaps more due to VAT. This puts pressure on both sides, producers and consumers. Part of this burden may be borne by producers, who will reduce the prices of their products so as to maintain the market share they have. A second part, the larger one, will burden consumers in the country of arrival. It remains to be seen whether this burden together with VAT and duty will be such that it will make these products even more expensive than the corresponding ones produced in domestic markets. And to answer your question, I believe there will be impacts, certainly a small curtailment of e-commerce. However, let’s not forget that the cost of products on these platforms is reduced because they handle huge quantities of the same product and this somehow comes to offset both the tax and tariff burden.
How do you comment on the position that these fees will hit the weaker economic strata, making products such as clothes or shoes more expensive?
It is clear that specific groups of consumers who turn to these products will be hit. However, something noteworthy is that a very large group turning to these platforms for purchases are young people, not necessarily from the lower economic classes. They shop there because it’s trendy, not because it’s cheaper. From Temu and Shein, young people whose family income may be €100,000 a year are buying. From clothes to shoes and accessories, these platforms are aimed at young people. And I don’t even know to what extent low incomes turn to these platforms for purchases.
How likely do you consider it that duties will deter purchases of products that, let’s say, are not necessary?
Today this is the market—that is, advertising and marketing are what create consumer preferences and consumer patterns. I go in to do a simple search for a trip to Cyprus, for example, and in the following days I’m bombarded with related advertisements. E-commerce has “read” me, knows what I want, knows what I could buy and bombards me with related material. And within all this bombardment, we’ll see something we want and will buy. And this drives the market, from which of course domestic businesses and producers also benefit.
There is also the position that if products from third countries become more expensive, it will be an opportunity to boost domestic European production. Does something like this hold true?
I believe it’s something difficult to happen. These products come from countries where the production cost is a third, a quarter compared to Europe. Let’s just compare the wages of a worker in Vietnam or Cambodia with those in France or Germany. This is why for many years now European countries have lost their comparative advantage in producing these products. Therefore, a turn towards other products, a turn towards other directions, possibly organisation of European commerce on a corresponding basis may perhaps be the answer to making European businesses and European producers more competitive. In my opinion, imposing duties on third countries is correct. Beyond that, however, using these measures as a wall or as an obstacle to international trade and the movement of products and services is something to be feared.
Major challenge for customs authorities
What will be the challenges that European customs will have to face in the new year, as they will have to process millions of small packages daily?
The issue is highly administrative. Clearly the volume of transactions will increase, since until now these packages did not go through such thorough checks. There will be a delay, they will not reach the hands of consumers who have bought them so quickly, and there will certainly be administrative costs for the authorities. And it should be noted here that customs authorities must organise themselves, and this of course will not happen without cost, so that they can meet the new challenge. On the one hand this is a central EU issue, but to a greater extent it concerns the member states themselves, how ready they are to be able to handle this.
And let’s not forget that we are also awaiting a customs reform that the EU is promoting for the near future.
If I’m not mistaken, the reform has been expedited and the goal is for it to be implemented in the second half of 2026. Revenue is what is burning Europe at the moment and that’s why it’s doing everything it can to increase it.
Can we estimate roughly what the revenue for the EU will be from duties on packages from third countries?
It is difficult to make such an estimate, precisely because we don’t know exactly what the volume of these packages is. We will have a much better picture in two to three years, when a reasonable period of time has passed since the implementation of the measure, so that a good estimate can be made, both at national and European level. Trade is changing at a rapid pace and most importantly the rules of the game are changing. It is a new development, which yes we knew about to some degree until now, but now we see it swelling, because there are new perspectives. At this moment there is vigilance and time will show to what degree the network that will manage electronic transactions must be developed.
One could reasonably wonder whether the EU will ultimately count profits or losses. And I say this in the sense of what the revenue from duties on small packages will be in relation to the expenses that will be incurred for their management by the customs authorities.
If I may use the expression, sectoral issues also arise here. In the sense that European businesses are facing competition from third countries and that something must be done. The cost of these products outside the EU is lower even with the imposition of duties, and to a large extent the quality factor has been eliminated, since most now do not lag behind their counterparts in Europe or North America in terms of quality. Therefore, it is a matter of pure cost, to what extent it is attractive because of its price. Now, there is pressure being put on businesses, various sectors on enterprises for protection.