Council to Discuss Abolition of €150 Threshold for Distance Sales (18 May 2026)

Summary

• The EU Council Working Party on VAT will meet on 18 May 2026 to discuss proposed changes to distance sales rules, including the abolition of the €150 threshold.
• The proposal also addresses the VAT treatment of goods stored in customs warehouses, indicating further alignment with e-commerce VAT reforms.
• Discussions remain at an exploratory stage (exchange of views), signalling continued policy development following ViDA and broader digital VAT initiatives.

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Article

1. Introduction

On 5 May 2026, the General Secretariat of the Council of the European Union issued CM 2739/26, announcing a meeting of the Working Party on Tax Questions (Indirect Taxation – VAT) scheduled for 18 May 2026 at 10:00 in Brussels.

The meeting will focus on a targeted but highly relevant topic:

• The abolition of the €150 threshold for distance sales, and
• The VAT treatment of goods held in customs warehouses.

These topics are central to the ongoing evolution of the EU VAT framework for cross-border e-commerce.

2. Agenda Overview

The provisional agenda includes two items:

2.1 Directive on VAT rules for distance sales

The Working Party will hold an exchange of views on a proposed directive covering:

• Abolishing the €150 threshold, and
• Adjusting rules for customs warehouses in distance sales scenarios.

2.2 Any other business

Standard agenda item allowing delegations to raise additional VAT-related topics.

The meeting will be held in “2+2” format, indicating participation limits per delegation.

3. Abolition of the €150 Threshold – Context

3.1 Current framework

The €150 threshold is a key feature of EU VAT and customs rules:

• It determines eligibility for simplified import VAT treatment, including the Import One Stop Shop (IOSS).
• It currently distinguishes low-value consignments from higher-value imports.

3.2 Policy direction

The inclusion of this topic signals that the EU is considering:

• Eliminating the threshold altogether, potentially extending simplified VAT mechanisms beyond low-value goods.
• Further aligning VAT and customs frameworks to address fraud risks and distortions in e-commerce.

This follows broader EU policy objectives to:

• Close VAT gaps,
• Ensure neutrality between EU and non-EU suppliers, and
• Strengthen digital reporting and control mechanisms.

4. Customs Warehouses in Distance Sales

The proposal also addresses goods stored in customs warehouses, a structure increasingly used in cross-border e-commerce.

Key considerations likely include:

• Clarifying when VAT becomes chargeable for goods stored within the EU but sold remotely.
• Aligning VAT treatment with modern supply chain models (e.g. fulfilment centres, marketplace logistics).
• Reducing opportunities for deferred VAT or misuse of customs procedures.

This reflects a broader trend of integrating VAT rules with logistics realities and platform-driven commerce.

5. Nature of the Discussion

The agenda explicitly states “exchange of views”, which is significant:

• No legislative agreement is expected at this stage.
• The discussion is intended to:
  • Gather Member State positions,
  • Identify technical and political challenges, and
  • Shape the direction of the legislative proposal.

This positions the file in an early-to-intermediate stage of EU decision-making.

6. Practical Implications for Multinationals

For multinational businesses, especially those involved in e-commerce, marketplaces, and cross-border supply chains, this initiative has clear implications:

6.1 Potential expansion of VAT reporting obligations

Abolishing the €150 threshold could:

• Extend IOSS-type obligations or similar VAT reporting mechanisms to all imports, regardless of value.
• Increase the volume and complexity of transaction-level reporting.

6.2 Impact on supply chain design

Changes to customs warehouse treatment may require:

• Reassessment of EU fulfilment and storage models,
• Alignment between VAT determination and logistics flows, and
• Updates to ERP and tax engines supporting transactional VAT determination.

6.3 Interaction with ViDA and e-reporting

This initiative should be seen alongside:

• ViDA digital reporting requirements,
• E-invoicing developments across Member States, and
• Increased data-driven VAT control by tax authorities.

Together, these reforms point towards a fully digitised and harmonised VAT ecosystem.

7. Conclusion

The upcoming discussion on 18 May 2026 highlights the EU’s continued focus on refining VAT rules for cross-border trade.

The proposed abolition of the €150 threshold and changes to customs warehouse treatment reflect a broader strategic objective:

• Ensuring fair taxation of e-commerce,
• Reducing VAT fraud, and
• Aligning VAT frameworks with modern supply chain realities.

While still at the discussion stage, this initiative is a clear signal that further structural changes to the EU VAT system are underway, with direct consequences for global businesses operating in the EU market.

 

Source data.consilium.europa.eu

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