Summary
- The European Commission has published revised guidance clarifying the VAT treatment of the new EUR 3 customs duty applicable to distance sales of imported goods not exceeding EUR 150 from 1 July 2026 until 30 June 2028.
- The VAT consequences differ depending on whether goods are imported through the Import One Stop Shop (IOSS), the Special Arrangements, or the standard import procedure.
- The Commission also confirms that the future Union handling fee expected from November 2026 will be outside the scope of VAT and will not form part of the import VAT taxable amount.
EU Provides VAT Guidance on New EUR 3 Customs Duty for Low-Value E-Commerce Imports
The European Commission has published an addendum to its VAT e-Commerce Explanatory Notes clarifying the VAT treatment of the new EUR 3 customs duty applying to low-value imported goods following recent EU customs reforms. The guidance is effective from 1 July 2026 until 30 June 2028 and addresses the interaction between the customs duty and EU VAT rules for distance sales of imported goods (DSIG) with a value not exceeding EUR 150.
The clarification follows the abolition of the long-standing customs duty exemption threshold of EUR 150 under Council Regulation (EU) 2026/382. As a result, a temporary fixed customs duty of EUR 3 per item now applies to eligible low-value imports entering the European Union. The duty becomes payable when the customs declaration for release for free circulation is accepted by customs authorities.
IOSS Imports: No Import VAT on the EUR 3 Customs Duty
Where goods are imported using the Import One Stop Shop (IOSS), import VAT remains exempt. Instead, VAT is collected at the point of sale and subsequently reported and remitted through the monthly IOSS return.
The Commission confirms that because IOSS consignments benefit from import VAT exemption, no VAT is due on the EUR 3 customs duty at the moment of importation. Furthermore, the EUR 3 duty should generally not be included in the VAT taxable amount applicable to the supply because the duty only arises when the customs declaration is accepted and therefore does not exist at the time of sale.
However, the guidance introduces an important exception. Where the supplier charges the EUR 3 customs duty to the consumer at the time of sale, the amount becomes part of the consideration received from the customer. In such circumstances, the EUR 3 customs duty forms part of the VAT taxable amount and becomes subject to VAT as part of the supply price.
Special Arrangements: Customs Duty Included in Import VAT Base
The position differs where imported goods are cleared under the Special Arrangements regime, which may be used when IOSS is not applied. Under these arrangements, import VAT remains due, with postal operators or carriers collecting the VAT from consumers and remitting it to the tax authorities.
Since VAT is payable at importation, the Commission confirms that the EUR 3 customs duty must be included in the taxable amount on which import VAT is calculated. Consequently, VAT is charged not only on the value of the imported goods but also on the EUR 3 customs duty itself.
The guidance further clarifies that where goods are subsequently returned, any VAT charged on the EUR 3 customs duty should be refunded together with the VAT originally paid upon importation.
Standard Import Procedure Follows Similar Rules
For businesses that do not use either IOSS or the Special Arrangements, imports remain subject to the standard customs and VAT procedures. In this case, the Commission confirms that the EUR 3 customs duty must likewise be included in the import VAT taxable amount.
As under the Special Arrangements regime, any VAT charged on the customs duty should be refunded if the imported goods are returned and the original import transaction is unwound.
Future Union Handling Fee Will Not Be Subject to VAT
The guidance also addresses the Union handling fee expected to be introduced as part of the wider EU Customs Reform Package, potentially becoming applicable from November 2026 at the earliest.
According to the Commission, this fee represents remuneration for services performed by customs authorities acting in their public capacity. As a result, the fee falls outside the scope of VAT. Furthermore, because it is not considered a customs duty, it will not form part of the VAT taxable amount upon importation. No VAT will therefore be due on the Union handling fee itself.
Practical Implications for Businesses
The guidance highlights an important distinction between the VAT treatment of the EUR 3 customs duty under IOSS and under traditional import mechanisms. Businesses using IOSS can generally avoid VAT being charged on the customs duty at importation, while importers using Special Arrangements or standard customs clearance procedures must include the duty within the import VAT base.
E-commerce platforms, online retailers, logistics providers and customs intermediaries should review their pricing models, checkout disclosures and customs clearance processes to ensure that VAT is accounted for correctly under the revised framework.
External Links
- Council Regulation (EU) 2026/382 abolishing the EUR 150 customs duty relief threshold:
https://data.europa.eu/eli/reg/2026/382/oj - European Commission Customs Guidance on the EUR 3 Customs Duty:
https://taxation-customs.ec.europa.eu/document/download/053e5b4e-f0be-4f20-9a23-3e3b659a6676_en - EU VAT E-Commerce Rules:
https://taxation-customs.ec.europa.eu/taxation/vat/vat-e-commerce_en - Import One Stop Shop (IOSS):
https://taxation-customs.ec.europa.eu/ioss_en
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