Businesses Navigate Changing Import Rules in Global Trade Shift

The explosion in cross border e-commerce trade over the past decade—the EU reports it receives over 12 million parcels daily—has been hugely helped by the existence of low-value import rules. These allow goods to enter territories free of duties and often other taxes.

However, several countries are about to change these rules, and retailers will need to be aware to ensure their products remain competitively priced and can reach customers promptly.

In August, the US made its final changes to its de minimis rules for imports of low-value goods. The impact from the changes is beginning to ripple through the economy, with stories of consumers being hit with large import duty, brokerage and administrative charges.

The EU is set to make similar changes in 2028, and the UK is currently consulting on this.

De minimis limits were implemented to allow low-value goods to enter a country free of charges because the cost of collecting the taxes outweighed the amount collected. These rules were put in place before the explosion of e-commerce trading. Countries are now also focused on protecting their own businesses from lower priced competitors while aiming to increase tax take.

In the EU and UK, de minimis rates of 150 euros ($175) and £135 ($180) respectively have been in place since 2021. Consignments under these amounts can come in free of duty and import value-added tax, but the suppliers must account for what is referred to as supply VAT.

The EU implemented a new VAT registration system, the Import One Stop Shop, or IOSS, to help traders account for that VAT due across all EU member countries. Critically, it also only allows for imports to enter if a valid IOSS number is declared at the time of import—the normal import rules apply if that is missing.

In the UK, traders are expected to register for VAT and account for the VAT due, per normal rules. Unlike in the EU, there is no need for a declaration to be made on the import documents. As a result, many consignments are delivered free of import taxes where the supplier also doesn’t account for the VAT due. This issue is also compounded by items deliberately given a lower valuation to benefit from the de minimis limits. The EU also isn’t immune from these issues, with valuation abuse. and the misuse of IOSS numbers—legitimate ones being stolen and used for import—is rife.

What’s Changing

The EU announced its intention to reduce its de minimis limits to zero some time ago, before the US changes. It aimed to combat the issues mentioned above, collect greater revenue, and protect domestic businesses. It’s also hoped that the changes will ensure low quality, unsafe products are stopped from entering the EU.

These changes will take affect from July 1, 2028, with suppliers being expected from that date to collect amounts of import duty plus the current supply VAT and declare them via a simplified IOSS return. The intention is to have the taxes due equal those incurred by domestic businesses.

The UK is still consulting on its low-value goods system. Since Brexit, the UK has tended to follow the EU’s lead on issues like this and so it wouldn’t be surprising to see the same approach taken.

Aside from these changes, several EU countries have mentioned introducing a processing fee to manage the import of all low-value goods that arrive at their border. This could be around 2 euros per consignment and would be another cost to consider. The EU’s updated Customs Code does contemplate these charges, but it isn’t due for another couple of years so those impacted aren’t willing to wait any longer.

Managing the Changes

The abolition of the US’ $800 limit has already had significant impact. Beyond increased costs for consumers, many businesses have also decided to stop shipping to the US, meaning some items are no longer available. This position is complemented (and in a way, supported) by trends seen in social media campaigns and redirections of shipping towards different markets—in particular, the UK and EU.

Tax authorities are putting more resources into protecting their borders, with increased checks on consignments and inspections of the businesses involved.

What actions should businesses be taking to ensure they remain compliant, but also get products to customers efficiently, promptly and competitively? We would recommend the following:

Check and confirm your supply chains. Where are goods purchased from, which ports do they enter at and how they reach the final consumer? This is important so a comparison of alternatives can be made.

Review the valuation of your items and confirm what is put on import documents. Clearly directing the intermediary that completes the customs declarations is critical for this. The currency to be applied, foreign exchange rate if needed, details on origin, recipient, and who is liable for any taxes plus other items should be agreed up front. It should also reflect the terms and conditions on any sales websites.

Check the pricing strategy and that it matches what is advertised. For instance, is the price shown inclusive or exclusive of any taxes that are due, what currency is it in, does it include or have shipping added afterwards? Importantly, can reports be run that give all these details alongside where goods have moved? This is critical to ensure that the right amount of tax is charged, collected and remitted—and to benefit from de minimis limits where possible.

Compliance obligations tie into the point above, as the type of registration needed to declare and pay the tax will depend upon the territory where imports happen and their supply chain.

To manage the action points above isn’t a job for just the tax department. It needs input from logistics, sales, and website and marketing teams. Collaboration and prompt sharing of information is vital.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Rob Janering is partner, VAT, customs and international trade with Crowe UK.

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