What Is The EU De Minimis Exemption and Why Is It Ending

The European Union (EU) de minimis exemption had allowed packages valued below €150 to enter the European Union without paying import duties. While historically packages required customs declarations and value-added tax (VAT) payments, the duty exemption had created a significant advantage for non-EU sellers, particularly from China. The European Council officially voted to eliminate this threshold on November 13, 2025, ending a key benefit that many e-commerce businesses have built their models around.

This change comes as the EU faces an increase of packages entering the market. In 2024 alone, approximately 4.6 billion parcels entered the EU under the de minimis threshold, with over 90% originating from China. This represents more than double the volume from the previous year.

The elimination addresses three key concerns:

• Competition: EU retailers must pay duties on inventory while foreign sellers avoid these costs
• Lost tax revenue: The EU Customs Reform proposal estimates this could generate an additional €1 billion annually in customs revenue
• Product values: The EU Customs Reform found that up to 65% of low-value parcels entering the EU are currently undervalued to avoid customs duties

Product category impact

Many DTC categories currently benefiting from de minimis will see direct increases in duty costs. These include fashion, jewelry, accessories, beauty and skincare, home goods, and most consumer products priced below €150.

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When Will These Changes Take Effect Across EU Member States

The EU will implement the de minimis exemption removal beginning in 2026, following the European Council’s formal agreement on November 13, 2025. This represents an accelerated timeline from the original 2028 implementation target.

Key implementation dates for your planning:

• January 2026: Implementation of interim solution removing the exemption as early as possible
• Mid-2028: Full implementation through the EU Customs Data Hub

All 27 EU member states will follow this timeline. The EU has emphasized there will be no grace period or exceptions once implementation begins.

The urgency felt by European lawmakers led to this accelerated timeline, with EU Trade Commissioner Maroš Šefčovič stating that the original 2028 timetable was “incompatible with the urgency of the situation.” The compromise date of early 2026 gives businesses limited time to adapt their strategies.

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How The New De Minimus Rules Will Impact Your Shipping Costs and Operations

The removal of the de minimis exemption will directly increase your landed costs for all shipments entering the EU. Every package, regardless of value, will now incur customs duties. Duty rates vary significantly by product category, with the EU’s Common Customs Tariff covering more than 13,000 tariff lines. Your final rate is determined by a combination of what the product is, its HS code, and its country of origin, not just where you ship it from. Electronics typically face rates of 0-5%, while textile imports often see rates around 12%.

Understanding how tariffs work across different markets is crucial for e-commerce brands. For more insights on navigating these changes, see our guide on adapting to US tariff changes, which shares similar compliance strategies.

How VAT stacks on top of duties

Most EU countries calculate VAT on product value + shipping + duties, which means that higher duty amounts indirectly increase the VAT owed.

Additional costs beyond customs duties

Customs clearance processing fees typically add €5-10 per package based on industry estimates. Delivery timelines may extend by 1-3 business days due to customs processing. Brands that ship DDP (Delivered Duty Paid) with accurate data, including correct HS codes, values, and VAT handling, usually see fewer surprises and sit at the lower end of that delay range. Shipments that rely on the customer to pay duties on delivery, or that have poor documentation, are more likely to be held up.

Documentation requirements will become more stringent, with every shipment needing complete commercial invoices with accurate HS codes. VAT obligations will remain through the Import One-Stop Shop (IOSS) or alternative arrangements.

The financial impact on your business

The financial impact becomes clear when examining typical e-commerce orders:

For a €50 product:

• Before: €50 product + €0 duty + €10.50 VAT = €60.50 total landed cost
• After: €50 product + €6 duty (12%) + €10.50 VAT + €7 processing = €73.50 total landed cost

This represents a 21% increase in landed costs that must either be absorbed by your business or passed on to customers. For brands operating on thin margins, this change could significantly impact profitability.

For higher-value products, the impact scales proportionally. Consider a €200 product:

• €200 product + €24 duty (12%) + €42 VAT + €7 processing = €273 landed cost

This represents a €31 increase over today’s cost structure. This cost increase is meaningful even for high-AOV brands because duties and VAT scale with value, while processing fees remain fixed.

If your main products sit between €70 and €120, you can expect the combined effect of duty, VAT, and processing fees to add a noticeable percentage on top of your current landed cost, especially for gifting and impulse price points.

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Assess Your Exposure Now
‍Talk to our team to understand how these changes will affect your specific product categories and shipping strategy.

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What Alternative Strategies Can Brands Use to Stay Competitive

With the de minimis exemption ending, you’ll need to adopt new approaches to maintain competitive pricing and efficient operations. Several strategies can help offset the increased costs and complexity.

Direct fulfillment

Eliminates warehouse holding costs and accelerates cash flow cycles. This model enables you to ship finished goods immediately after production. Even with duties now applying to all shipments (per parcel), direct fulfillment can still reduce total landed cost by eliminating storage, handling, and inventory financing fees. These are costs that meaningfully impact categories where margins depend on lean operations and fast inventory turnover.

Learn more about how direct fulfillment works and its benefits for ecommerce brands in our CEO’s breakdown of the new EU import rules.

Product bundling

Increases your average order value, helping distribute fixed customs clearance costs across more revenue. Since processing fees remain relatively constant regardless of package value, higher-value shipments become proportionally more efficient.

The right strategy depends on your product category, average order value, and customer expectations. Most successful brands will implement a combination of these approaches to minimize the impact of the new duties.

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How Direct Fulfillment Reduces Total Landed Costs

Direct fulfillment provides a compelling alternative to traditional supply chains in the post-de minimis era. This model ships products straight from production facilities to end customers, bypassing intermediate warehousing steps. Even with duties now applying to all shipments, the overall cost savings from eliminated touchpoints can offset the new duty expenses.

The direct fulfillment model eliminates several cost centers that typically inflate landed costs:

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The 25% total cost reduction comes primarily from:

• Eliminated warehousing: No storage fees, handling charges, or inventory financing costs
• Optimized shipping routes: More efficient shipping lanes with fewer touchpoints
• Reduced inventory risk: Production closer to actual demand, minimizing markdowns

This approach also accelerates your cash flow cycle compared to traditional inventory models. Products become available for sale almost immediately after production rather than waiting for warehouse receiving and processing. For more on optimizing cash flow during peak seasons, see our guide on BFCM stocking strategies that improve capital efficiency.

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What Steps Should Your Brand Take To Prepare For These Changes

Preparing for the de minimis exemption removal requires a systematic approach to minimize disruption to your EU business. Follow these steps to ensure your operations are ready when the changes take effect.

1. Audit current EU shipments

Begin by analyzing your EU order data to understand how many shipments fall below the €150 threshold. Identify your most affected product categories and calculate the potential duty impact based on their Harmonized System (HS) codes. This baseline assessment will quantify the financial impact on your business.

2. Update pricing models

Revise your pricing strategy to account for the new duty and processing costs. Test different pricing scenarios to determine how much of the increased cost can be passed to customers without significantly impacting conversion rates. Consider implementing country-specific pricing to account for varying duty rates.

To understand how duties will affect margins and conversion, model three scenarios:

• Brand absorbs most costs: Lower margins, frictionless customer experience
• Customers absorb most costs: Margins protected, potential conversion impact
• Hybrid approach: Adjust pricing by market or category

3. Evaluate fulfillment options

For many brands, a hybrid approach works best—using direct fulfillment for new products and EU warehousing for proven bestsellers. If you sell devices or electronics with accessories (for example, cameras with straps or cases), run separate models for the core device and for accessory bundles, since they can sit in different duty brackets and have different demand patterns.

Given that duties will now apply to all shipments regardless of fulfillment method, EU-based warehousing is becoming increasingly attractive for high-volume products. Remember: bulk importing into EU warehouses requires paying duties once per inbound shipment, while direct shipping applies duties per parcel.

If you’re considering changing providers, our guide to assessing 3PL providers covers key questions to ask potential partners.

4. Communicate with customers

Develop a clear communication plan to explain any pricing or delivery time changes to your EU customers. Transparency about the regulatory changes can help maintain customer loyalty despite potential price increases. Consider offering incentives like free shipping thresholds to offset the perceived impact of higher landed costs.

Update these core areas:

• EU shipping & duties FAQ
• Checkout messaging for duties/VAT
• Country-specific pricing if applicable
• A short educational banner or email explaining regulatory changes

See How Portless Can Help

‍Learn how our platform can help you implement these preparation steps seamlessly.
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FAQ

How do EU changes compare to the $800 de minimis threshold in the US?
‍The EU’s complete elimination is more aggressive than the US approach. The United States eliminated its $800 de minimis exemption on August 29, 2025, affecting all imports. Both regions acted in response to the massive volume of low-value shipments from Chinese e-commerce platforms. For details on how US brands are adapting, see our comprehensive guide to US tariff changes.

Which product categories will face the highest duty increases when the EU de minimis exemption ends?
‍Fashion, accessories, jewelry, beauty products, home goods, and electronics under €150 will experience significant impact. Products made from textiles or metals (including accessories) commonly face duty rates around 12%, while electronics often fall in the 0-5% range. These categories currently benefit most from duty-free shipping and typically have lower per-unit values that have historically qualified for the exemption.

EU duty rates are determined by the Combined Nomenclature, with rates varying significantly by product classification. Textiles typically face rates around 12%, while electronics often see lower rates of 0-5%, meaning impact varies considerably by product type.

What documentation will EU customs require for all packages after the de minimis exemption ends?
‍Every shipment will need a commercial invoice, customs declaration with accurate HS codes, proof of origin, and verification of VAT payment through the Import One-Stop Shop (IOSS) or alternative methods. Electronic submission will be mandatory, with more stringent documentation requirements across all shipments. The EU Customs Data Hub, expected to be fully operational by mid-2028, will standardize these processes across all member states.

How can brands determine the correct HS code for their products entering the EU?
‍You’ll need to identify the correct Harmonized System (HS) code for each product category. These standardized codes determine duty rates and are essential for accurate customs declarations. The EU’s TARIC database provides the official tool for looking up HS codes and applicable duty rates. Consult with a customs broker or use digital tools that provide HS code lookup functionality for accurate classification.

Will imports from the UK to EU countries be affected by these changes?
‍Yes, all imports from non-EU countries, including the UK, will be subject to duties regardless of value once the de minimis exemption ends. This applies to all product categories, which must be properly classified with correct HS codes. Brexit created separate customs systems, so UK goods entering the EU are treated as third-country imports.

What happens with returns and exchanges under the new rules?
‍Returned products do not automatically qualify for duty refunds. Replacement, exchange, or warranty repair shipments may incur duties again unless specific customs procedures are used. Brands with high return rates or significant repair volumes should review these workflows with their 3PL or customs partner to avoid paying full duty twice when it can be prevented.