New plans have been approved by the European Parliament to control the increasing flow of substandard and unsafe cheap products. Currently, 12 million small ecommerce packages arrive in the EU every day. This new rules is to protect consumers and make checking the quality easier. In this blog, we will talk about what is changing and what impact this will have on companies. What will this mean for cross-border sellers and how can you adapt? We will help you to understand this situation.
What is changing?
For years, parcels worth less than €150 could enter the EU without paying customs duties. This made it easy for sellers outside Europe to send cheap products directly to consumers at low prices. This led to that some sellers undervalue their goods to avoid taxes, which is around 65% of the packages that enters the EU. Not all products shipped from outside the EU meet the region’s strict consumer protection standards.
The EU want to change that, here is what is new:
- No more small tax-free small parcels: All goods entering the EU will be taxed, no matter the price. The tax rate depends on the type of products. 5% for toys, 12% for clothes and 17% for shoes.
- New customs processing fees: Every package from outside the EU will have a €2 processing fee.
- Mandatory EU warehouse for non EU-sellers: Sellers outside the EU need to store their goods in local European warehouses. This is to inspect products in bulk easier and faster. By requiring goods to be stored and inspected locally, authorities can better ensure they meet the safety rules. If goods are stored in an EU warehouse and shipped from there, the fee decrease to €0.50 per package.
Who will feel the most impact?
This reform targets 12 million small parcels that enter the EU every single day. In 2024, 4.6 billion low-value parcels were imported into the EU (91% came from China).
Platforms like Temu and Shein rely on selling huge volumes of low-cost products shipped directly from China. Their current business is built on high turnover and low margins. These changes will hit them much harder and others. The additional tariffs increase the price of a €15 clothing item sold on Temu or Shein by almost 13%, which would take away more than half of the seller’s profit. Temu is already planning to open warehouses in Poland and Germany. Shein is shifting their focus to higher-value goods over €50, which are less affected by the new rules.
Because of the ‘’more for less’’ trend, the EU are taking actions. By removing the low-value import tax, adding new handling fees, requiring local warehousing, the EU is raising the bar for market entry. The additional fees could raise yearly expenses for sellers sending 1000 packages every day by more than €360,000. Some sellers may experience a 30% to 50% increase in their overall expenses when paired with the tariffs.
How can sellers adapt?
If you want to stay in the EU market, you will need to focus on the following rules: improve products quality, adjusting prices, and rethink of logistics strategies. First, compliance should be your top priority. This means following all EU rules for VAT, EPR, and market access. Make sure you register for VAT in the country where your stock is stored, file your tax returns regularly, and use shipping methods that meet EU requirements. This will help you avoid extra checks or fines from local tax authorities.
Your products also need to meet EU quality and safety standards. For example, electronics must have CE and RoHS certification, clothing and textiles must follow REACH rules, and toys or children’s products must meet the EN71 standard.
Costs are going up, sellers might need to increase prices a little to protect profits. For cheap items under €20, you could bundle products together so that the extra tax and shipping costs are shared across several items.Create better quality products and build your own brand to justify a higher price. Having a warehouse in Europe is becoming more and more important. Shipping in bulk to a local warehouse can lower your costs per item.
The new EU rules have officially ended the era of tax-free small parcels. In the short term, this will cause some challenges, but in the long run, localisation and strict compliance with regulations will be the key to success.
Looking for a logistics partner who can help you adapt to the new EU rules?
At MN Logistics, we understand how these changes affect cross-border sellers and what it takes to stay competitive in the European market. From helping you with compliance and local storage solutions to finding cost-effective shipping options, we make sure your business can keep moving forward. If you have questions or need tailored advice for your situation, feel free to contact us. We are happy to support!