The EU's €3 parcel duty: why US brands are moving stock into the UK and the EU

For years, US brands could sell to European customers straight from a US warehouse and treat customs as a rounding error. Low-value parcels entered the EU without customs duty, and the UK had a similar relief for parcels up to £135. That model is ending.

What changed on 1 July 2026

Since 1 July 2026, the EU charges a fixed customs duty of €3 on low-value parcels under €150. The duty applies per item, not per parcel: each different product in the parcel, identified by its tariff classification, attracts its own €3. A parcel with a cleanser, a serum and a moisturizer can carry €9 of duty before VAT.

The measure covers parcels declared through the EU's Import One-Stop Shop (IOSS), which the Council estimates carries about 93% of e-commerce flows into the EU. It is a temporary bridge. The EU plans to remove the €150 duty relief altogether in 2028, after which standard tariff rates apply. A separate EU handling fee per parcel has been discussed, but at the time of writing it has not been legislated.

The UK is following

The UK announced in the 2025 Autumn Budget that it will end customs duty relief for imports of £135 or less. The original deadline was March 2029. In June 2026, the government brought the date forward to October 2028.

UK VAT on these parcels already works differently from the EU: if you sell goods worth £135 or less directly to UK consumers from outside the UK, you register for UK VAT and charge it at checkout. Marketplaces collect it for you when you sell through them.

What this means for a US brand

Take a brand shipping 1,000 orders a month to EU customers, with an average of two different products per order. That is 2,000 items, or €6,000 a month in the new duty alone. Over a year, €72,000, before VAT, carrier fees or the cost of customers who refuse to pay charges on delivery.

You have three options.

1. Absorb it. Your margin pays. Fine for premium price points, painful for anything under $50.
2. Pass it to the customer. Either at checkout or on delivery. Charges on delivery are the worst version: customers who did not expect them refuse the parcel, and you pay for the return.
3. Move stock into the UK and the EU. You import in bulk, pay the normal tariff on the shipment's customs value once, and ship to customers locally. Duty depends on each product's tariff code, and for some categories the rate is zero.

When local stock starts to win

Local stock has fixed costs: a local company to act as importer, VAT registration, a 3PL warehouse, product compliance and someone to manage it all. It wins when the duty and delivery savings exceed those costs.

A quick test:

• Monthly orders to the region × average different items per order × €3 = your monthly duty bill under the new rule.
• Compare it with the monthly cost of a local setup: company, VAT, warehouse fees and management.

If the duty bill is already close to the setup cost, the decision is easy, because local stock brings other gains the formula leaves out:

• Delivery in 1 to 3 days instead of a week or more.
• Simple returns to a local address, which customers in the UK and the EU expect.
• No surprise charges at the door, so fewer refused parcels.
• Access to retail and marketplaces. Many retailers and marketplace fulfilment programs expect local stock and a local supplier.

What you need to hold stock locally

• A local company to import. Without one, imports go through a customs agent acting as your indirect representative, who shares liability for duties. Few agents accept that for a non-resident brand.
• VAT registration in each country where stock is held. Non-resident businesses have no registration threshold: the obligation starts with the first sale.
• An EORI number for customs.
• A 3PL warehouse connected to your store or marketplace.
• Product compliance: an EU responsible economic operator under the General Product Safety Regulation, and for cosmetics, a Responsible Person in the UK and the EU.

The bottom line

The low-value parcel model gave US brands a cheap way to test Europe. From 2026 in the EU and 2028 in the UK, it becomes a tax on every order. Brands with steady demand in the UK or the EU should run the numbers now, while setup still fits into a calm quarter rather than a deadline.

Sources

• Council of the EU: customs duty on small parcels from 1 July 2026
• Crowe: EU agrees fixed customs duty on small parcels
• EAS Project: EU €3 customs duty, what IOSS sellers need to know
• Deloitte: UK customs duty relief for low-value imports, Autumn Budget 2025
• FashionNetwork / Reuters: Britain brings forward levy on low-value imports to October 2028
• HMRC VAT Registration Manual: overseas sellers and online marketplaces