The European Union has politically agreed on the most ambitious overhaul of its customs framework since the customs union was established in 1968. Across the Channel, the United Kingdom is pursuing its own, though earlier-stage, customs modernisation agenda, the first since its withdrawal from the EU. Together, these reforms will reshape how goods move across Europe’s borders.
This briefing is the third in our Customs Reform Unpacked series. E-commerce has been one of the primary drivers of both EU and UK customs reforms. The sheer volume of low-value parcels entering each market has overwhelmed existing systems and exposed gaps in duty collection, product compliance, and consumer protection. The EU’s response is impactful: abolishing the duty relief for low-value consignments (up to €150), making online platforms and sellers the importer for distance sales, introducing a handling fee, and creating a structured penalty framework for systematic non-compliance. Given the political pressure on European institutions to act now, several of the measures were introduced earlier in 2026. The UK is pursuing a parallel path, removing duty relief for low-value consignments (up to £135) and shifting liability to sellers and marketplaces under new arrangements expected to go live in October 2028.
Where this fits
The current customs treatment of low-value e-commerce flows is recognised as no longer fit for purpose on either side of the Channel. Goods valued at up to €150/£135 have historically been exempt from customs duties under thresholds designed for an era of modest cross-border parcel volumes in which the cost of collection did not justify charging duty. Billions of low-value parcels now enter the EU and UK each year, resulting in significant revenue losses, an unfair competitive advantage for overseas sellers over local businesses, and limited visibility for customs authorities into what is actually entering the market due to limited data collection. A recent EU-wide analysis found that more than half of e-commerce products shipped from third countries were non-compliant with EU product safety and other regulatory requirements. Consumers are nominally liable for duty – a paper liability that is not enforceable in practice.
Both the EU and UK customs reforms respond to these issues with a common set of objectives, albeit through different legislative instruments and timelines. First, customs duty will apply to all e-commerce imports regardless of value; the duty-free thresholds that have distorted competition are eliminated. Second, an administrative charge will be introduced for parcel imports to cover the rising costs that customs authorities incur in processing the enormous volume of individual consignments. Third, and most fundamentally, accountability shifts from the consumer to the economic operator who controls the transaction: in the EU, the seller or platform becomes the importer; in the UK, sellers and marketplaces will be responsible for registering, submitting item-level data, and paying duties directly and on a quarterly basis. Fourth, both reforms aim to equip customs authorities with better tools to enforce compliance at the border.
Key changes introduced by the EU Customs Reform
Our sixth briefing will focus on the UK customs reform. We highlight below the key changes introduced by the EU Customs Reform only.
- Abolition of the low-value duty relief. On 1 July 2026, the EU abolished its duty relief for low-value consignments in an effort to expedite parts of the broader EU Customs Reform. A €3 interim flat-rate duty applies per item in distance sale consignments with a value not exceeding €150, which are often referred to as B2C imports (though certain sales to businesses are also covered). Low-value shipments to businesses are subject to the Common Customs Tariff like any other import. Once the EU Customs Data Hub (the Data Hub) becomes mandatory for distance sales on 1 July 2028, the Common Customs Tariff will apply to all imports, including low-value B2C imports.
- Introduction of the Union handling fee. From 1 November 2026, the EU will impose an administrative charge, the Union handling fee, to cover the control costs linked to parcellated imports. The amount of the charge will be defined in a delegated act that will be published shortly after the official publication of the new Union Customs Code, which is expected to happen in early October 2026. The amount is expected to be around €2 per item. The handling fee will apply to distance sale imports, regardless of their value. The fee should bring to an end all national, often legally questionable, initiatives to impose parcel taxes or charges, including in France, Italy, and Romania.
- Identifying the imported products. From 1 November 2026, Product Identifiers (PIDs) become mandatory for all distance sale imports into the EU. Each customs declaration must include at least a Merchant Product Identifier (M-PID), assigned by the online seller, marketplace, or platform, and a Non-Standardised Manufacturer Product Identifier (NS-PID), assigned by the manufacturer or product supplier. Where a standardised identifier exists, a Standardised Manufacturer Product Identifier (S-PID) must also be declared. Where no standardised identifier exists, a specific exception code must be declared. It has been possible to provide PIDs on a voluntary basis since 1 July 2026. The objective is to improve the traceability of products sold in e-commerce, enable more effective customs controls on product safety and regulatory compliance, and support the enforcement of prohibitions and restrictions. Note that these changes are brought by implementing legislation that was adopted earlier, and not directly from the new Union Customs Code text.
- Anti-abuse in e-commerce. The EU has introduced a dedicated anti-avoidance provision targeting two key risks under the new customs duty regime for low-value consignments. First, the consolidation or artificial grouping of individual consumer parcels into larger consignments to reduce the number of items attracting the €3 duty and the per-item handling fee is expressly prohibited. Second, since the “item” is defined as goods sharing the same tariff classification, description, and origin, there is a risk that operators artificially homogenise product descriptions to declare heterogeneous goods as a single item type, thereby reducing the total customs duty and Union handling fee exposure.
- From “intrinsic value” to customs value. Under the previous regime, eligibility for the duty exemption was based on the “intrinsic value” of goods (i.e., the product price excluding shipping, insurance, and handling), which was also declared as the customs value. The new Union Customs Code requires the full transaction price, including those costs, to be declared instead, following the traditional customs valuation rules. This means declared customs values will be higher across the board, and some goods that previously fell below €150 may now exceed it, taking them out of the interim flat-rate duty regime and into regular customs duties. Customs authorities will also have enhanced powers to challenge declared values in distance sales, with a lower bar for re-determining the value than in traditional trade. Robust, auditable pricing records will be essential.
- Introduction of the “importer for distance sales” (aka deemed importer). For e-commerce, the person supplying or facilitating the distance sale of goods imported from third countries is treated as the importer. This change is intended to shift responsibility from the consumer to the economic operator who controls the supply chain. The importer for distance sales is no different from a “regular” importer: it must ensure compliance with customs legislation and all other legislation applied by the customs authorities and provide the required data before the release of the goods.
- Customs warehouses for distance sales. The EU Customs Reform introduces a dedicated customs warehouse for distance sales, available exclusively to operators with Trust and Check Trader status who use the VAT Import One Stop Shop scheme. Goods stored in these warehouses must comply with EU product safety and market requirements before being placed in storage, enabling customs and market surveillance authorities to verify compliance of goods imported in bulk on entry rather than of individual parcels during delivery. When a sale is concluded, goods are released directly from the warehouse. This model incentivises a shift from parcellated imports to bulk logistics, offering a lower Union handling fee rate and faster release times for operators with the compliance infrastructure to qualify.
- EU Customs Data Hub: first mandatory use for e-commerce. Importers for distance sales will be the first operators required to use the Data Hub. From 1 July 2028, they must provide all customs data directly through the Data Hub, replacing customs declarations for these transactions. The data must include not only fiscal information (classification, origin, and value, etc.) but also product compliance records and transactional data from the VAT Import One Stop Shop. The Data Hub will cross-check this data against EU product safety systems and apply AI-assisted risk analysis in real time. The centralisation of data in the Data Hub will significantly increase the enforcement capabilities of customs authorities and, together with the newly established EU Customs Authority, enable structured data sharing between authorities and across Member States.
When does this apply?
The EU’s e-commerce changes are already in full swing. The €150 de minimis customs duty exemption was abolished on 1 July 2026, and the interim flat-rate duty applies from the same date. From 1 November 2026, PIDs must be declared for e-commerce imports, and the Union handling fee also applies from that date regardless of value. The broader provisions of the new Union Customs Code, including the importer concept and the associated non-fiscal liability, will apply from October 2027, 12 months after the new Union Customs Code’s adoption, with customs data continuing to be declared through existing infrastructure, including the simplified declaration for eligible low-value parcels.
The pivotal date is 1 July 2028, when the Data Hub becomes mandatory for distance sales, replacing the existing customs declarations and the simplified dataset. The availability of granular product-level data through the Data Hub will then enable the application of regular customs duties under the Common Customs Tariff in place of the €3 flat rate. To meet this deadline, the European Commission must adopt the relevant delegated and implementing acts by 1 July 2027, and the Data Hub must be operational by 1 June 2028.
Three reasons why this matters for your business
Reason 1: If you sell or facilitate e-commerce in the EU, you may become an accountable party. Under the EU Customs Reform, the consumer is no longer the customs debtor. Once you as a seller or marketplace are designated as the importer for distance sales, the full weight of customs obligations falls on you. The duty relief is already gone, the Union handling fee and PID requirements follow in November 2026, and the operationalization of the importer for distance sales is expected to apply from 1 July 2028. The pace leaves little room for delay. If you are a marketplace or seller, you should conduct a compliance readiness assessment now. Critically, if you are not EU-established, you should confirm whether your customs representative will be willing to assume the liabilities of the importer for distance sales under the new framework, as not all representatives may accept that expanded role and associated compliance obligations.
Reason 2: The cost of e-commerce sales into the EU is increasing, and you need to model the impact. Every e-commerce parcel now attracts customs duty: a €3 flat rate for low-value distance sale consignments, transitioning to regular tariff rates once the Data Hub goes live in 2028. A per-item Union handling fee will also apply from November 2026, regardless of value. For high-volume operators, these charges will materially affect landed cost and pricing. If you invest in Trust and Check Trader status and use the dedicated customs warehouse for distance sales, you can access lower handling fees and faster release times, but qualifying requires robust compliance infrastructure. You should reassess your delivery terms (DDP vs. DAP) and evaluate whether bulk logistics through customs warehousing offers a viable alternative to direct parcel shipments.
Reason 3: Non-compliance is no longer a one-off risk – it compounds. The EU Customs Reform introduces a dedicated penalty regime for distance sale operators, in which systematic failures trigger significant pecuniary charges, with an additional risk of losing trusted trader status or having operations suspended. Errors that would traditionally have been perceived as “low” on the enforcement risk scale may move to medium or even high because of their potential systematic nature, despite not having an immediate customs duty impact. Every penalty will be recorded in the Data Hub and feed directly into your risk profile, increasing the likelihood of future controls. With the Data Hub cross-checking your submissions against EU product safety systems in real time, and the EU Customs Authority coordinating enforcement across Member States, the margin for error will narrow significantly.
About the Reed Smith International Trade team
Reed Smith’s International Trade team is known for its deep experience in customs law, advising clients across the globe on the full spectrum of customs and international trade matters – from regulatory compliance, customs classification, origin, and valuation, to anti-dumping proceedings, sanctions, and export controls. Our team represents clients in customs litigation before courts and regulatory authorities worldwide, and advises multinational businesses on complex cross-border trade projects in every major jurisdiction. If you have questions about how the reforms discussed in this briefing may affect your operations, please reach out to your usual Reed Smith contact or one of the team members below.
This briefing is based on publicly available EU and UK legislative proposals and official policy documents as at the date of publication. The legislative process has not yet been fully completed, and key operational details are still to be determined. Timelines, thresholds, and specific requirements discussed in this briefing may change as the legislative process advances. Readers should verify any information against the final legislative texts and official authority guidance before making compliance or business decisions.
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