Low value items to face new EU Duty - 1 July 2026

The EU’s new €3 charge on low-value e-commerce imports and what it means for cross-border commerce, particularly online fashion

For years, fashion brands and marketplaces selling from outside the EU have benefited from a structural quirk in the EU’s border model: while import VAT has applied, most customs duty has not for low-value e-commerce parcels under €150. That is now changing.

In December 2025, EU Member States agreed to introduce a fixed €3 customs duty on small e-commerce consignments valued below €150, with the measure set to apply from 1 July 2026. (Consilium)

In this article we try to explain what the new charge is, how it is expected to work in practice, and most importantly, how it will reshape the economics of cross-border online fashion into the EU.

1) What is the “€3 charge,” exactly?

A fixed customs duty on low-value e-commerce parcels

From 1 July 2026, goods entering the EU in small consignments under €150 will face a fixed €3 customs duty (often referred to in headlines as a “€3 fee”). (Consilium)

Who does it apply to?

The Council communication indicates the €3 duty will apply to goods entering the EU where non-EU sellers are registered in the EU Import One-Stop Shop (IOSS) for VAT purposes—covering the majority of e-commerce flows (the Council cites 93%). (Consilium)

Is it per parcel, per item, or per “type” of item?

This is one of the most commercially important details for fashion (because baskets often include multiple SKUs and sizes):

• Several summaries of the agreement describe it as €3 per item, with a carve-out that multiple units of the same item in one package may only be charged once, while different products can be charged separately. (World Footwear)

• The Council press release frames it as a fixed duty applied to low-value consignments under €150 (with IOSS scope). (Consilium)

Practical takeaway: if your typical fashion order contains multiple different SKUs (e.g., top + trousers + belt), the effective charge can be meaningfully higher than €3 depending on final implementing guidance and the customs assessment approach.

Is this the only change coming?

No. This €3 measure is widely described as interim/temporary ahead of broader EU customs reform (including changes that ultimately remove the low-value duty exemption more permanently). (Consilium)

Separately, reporting has also discussed an additional handling-style fee proposal (often cited as €2 in earlier discussions). (Reuters)

2) Why this matters especially for fashion e-commerce

Fashion is unusually exposed because it combines:

• High order frequency and high parcel counts (especially in fast fashion)

• Lower average selling prices for many categories (accessories, basics, beauty add-ons)

• Multi-SKU baskets (a “try-on at home” behaviour pattern)

• High return rates (especially apparel and footwear)

• Strong competition from EU-based sellers with faster delivery and fewer cross-border friction costs

  
  

The €3 duty is small in absolute terms, but it is regressive: it hurts low-priced items disproportionately.

For example: A €3 add-on on a €12 accessory is a 25% shock; on a €120 coat it’s 2.5%. That changes what sells, what converts, and what remains profitable.

3) The most important impact: margin compression on low-AOV and low-ASP items

Where the pain is greatest

Expect the biggest commercial impact in these fashion segments:

• Ultra-low ASP: socks, underwear packs, costume jewellery, hair accessories, small leather goods

• Discount / promo heavy models: “€9.99 top + free shipping” economics

• Marketplace “endless aisle” imports shipped direct to the consumer (vs. EU stock)

• Dropship / print-on-demand fashion shipped per order from outside the EU

If you’re already absorbing shipping, duties, and “DDP-style” customer expectations, the €3 becomes another fixed cost to fund—one that is hard to hide when your gross margin per order is thin.

A simple way to sanity-check the impact (fashion examples)

Example A: low-value single-item order

• Selling price (ex-VAT): €18

• Gross margin before last-mile + border costs: say €10

• New duty: €3

That single change can remove 30% of the gross margin pool before you even consider shipping or returns.

Example B: multi-item basket with different SKUs (risk case)If the implementation effectively charges per “item type,” then a basket like:

• 1x top, 1x trousers, 1x belt

  could face €9 rather than €3 (depending on how “item” is assessed for the parcel). (IamExpat in the Netherlands)

For fashion, that pushes you toward either (a) higher AOV or (b) EU-based fulfilment.

4) Conversion and customer experience: what happens at checkout

Pricing transparency becomes non-negotiable

EU consumers have become accustomed to frictionless pricing from global platforms. If the €3 is added “at delivery” or inconsistently applied, you risk:

• abandoned carts (unexpected costs)

• refused delivery

• customer service overhead and chargebacks

• higher negative reviews (“hidden fees”)

Many sellers will choose to incorporate it into a delivered-duty-paid (DDP) style promise: “all taxes and duties included.” That typically improves conversion—but it forces the brand to internalize the cost and manage compliance tightly.

Basket engineering becomes a growth lever

Fashion marketers will likely respond with tactics such as:

• minimum order thresholds (e.g., “free shipping over €60” becomes “best value over €60”)

• bundling and multipacks (especially where multiple units may only be charged once) (Sortiraparis)

• steering customers away from low-ticket single-item orders

• dynamic shipping fees based on basket value, category, and destination

5) Logistics strategy: direct-to-consumer shipping vs EU stock

The €3 duty structurally penalises one-parcel-per-order direct shipping from outside the EU. That creates a stronger incentive to shift to:

Option 1: EU warehousing / EU fulfilment

Stock imported in bulk, then shipped domestically inside the EU:

• better delivery times

• fewer border touchpoints per order

• can improve returns handling and resale/recommerce workflows

• but requires working capital, forecasting, and inventory risk

Option 2: Hybrid model (best sellers in EU, long tail shipped cross-border)

A common fashion play:

• high velocity SKUs held in the EU

• long tail, odd sizes, or special drops shipped direct from origin

• use pricing to steer demand toward EU-held inventory

Option 3: Consolidation strategies (where permissible)

Depending on how the final implementing rules treat “items” and declarations, brands may try to:

• reduce parcel count

• reduce split shipments

• avoid multiple low-value parcels per customer journey

Note: policymakers have explicitly raised concerns about parcel splitting and undervaluation in low-value flows, so compliance scrutiny is expected to increase alongside the new duty. (Reuters)

6) Compliance and operational workload: “small fee” doesn’t mean “small change”

Even if €3 sounds operationally simple, the back-office implications for fashion retailers can be significant:

• product classification hygiene (apparel categories can be complex across materials and components)

• ensuring correct VAT collection method (IOSS flows are explicitly referenced in the scope) (Consilium)

• carrier and broker configuration updates

• customer communications and returns workflows

• landed-cost calculation and pricing rules by country (EU is not one VAT rate, even if it is one customs territory)

  
  

If you sell into multiple EU markets, the brands that win will be the ones that make the landed-cost experience predictable and fast.

7) Competitive dynamics: why EU-based fashion retailers may gain share

The stated policy intent (as described in reporting and EU communications) includes addressing:

• market distortion from the previous duty exemption,

• fraud/undervaluation concerns,

• product safety and enforcement strain,

• and fairness for EU-based sellers. (Reuters)

For fashion specifically, that could mean:

• EU retailers regain competitiveness in entry price points

• non-EU DTC brands feel pressure to “localise” (EU 3PL, EU returns address, EU entity)

• marketplaces may push more sellers toward EU inventory programs

8) What fashion retailers should do now (practical checklist)

With the start date set for 1 July 2026, planning in early 2026 is commercially sensible. (Consilium)

Commercial

• Identify the most exposed SKUs: low ASP, high volume, low contribution margin

• Model sensitivity by AOV bands (e.g., <€25, €25–€60, €60–€150)

• Re-test your “free shipping” architecture—consider replacing it with “best value” thresholds

Operational

• Confirm how your parcels are declared today (and whether you are in IOSS flows where relevant) (Consilium)

• Align with carriers on how the duty will be collected and displayed

• Prepare customer messaging (“taxes & duties included” vs “pay on delivery”)

Logistics / supply chain

• Evaluate EU fulfilment for top sellers (even a partial assortment)

• Consider an EU-friendly returns strategy (returns are a major hidden cost lever in fashion)

Bottom line for cross-border fashion into the EU

The EU’s new €3 duty on low-value e-commerce imports under €150, effective 1 July 2026, looks small but acts like a major structural shift for fashion:

• It penalises cheap, single-item orders and multi-SKU baskets shipped directly from outside the EU. (Consilium)

• It increases the advantage of EU-based inventory and fulfilment.

• It forces brands to get serious about landed cost transparency, compliance, and basket strategy.

With the EU €3 charge launching in 2026, now is the time to model your exposure ...

to safeguard your EU e-commerce profitability.

Article by Stephen Schwalger & Luigi Pezzuto

Sell To Europe & The USA