EU Abolishes Duty Exemption For Small Parcels: What Should Chinese Sellers Do?

The EU has scrapped the VAT exemption for consignments valued under €150, a policy that has profoundly reshaped the cost structure of cross-border direct mail shipments for Chinese merchants. Previously, parcels worth less than 150 euros imported into the EU enjoyed duty-free treatment, supporting a large number of low-value dropshipping businesses. With the new rules fully rolled out, Chinese sellers must adjust their operational strategies promptly to maintain profitability and avoid compliance risks.

 

1. Clarify the core content of the new EU small-parcel policy

The original €150 low-value goods exemption was terminated. All goods entering the EU, regardless of value, are subject to VAT declaration and payment.

During the transition phase lasting until July 2028, non-EU merchants sending direct mail parcels can apply a flat €3 customs duty per HS code. Starting November 2026, an additional €2 customs clearance fee will be imposed, further raising the landed cost of small parcels.

This policy targets cross-border direct mail shipments. Sellers who continue the dropshipping model will face obvious profit compression. Random customs inspections also become more frequent, increasing risks of cargo detention and extra storage charges.

 

 

2. Main challenges facing Chinese sellers

• Profit margins shrink: Low-price lightweight commodities can hardly absorb the newly added duties and clearance fees. Many products will no longer be economically viable for direct mail delivery.

• Compliance workload rises: Every parcel needs VAT filing, and incomplete documentation will lead to customs hold-ups.

• Price competitiveness declines: Local EU merchants and sellers with EU warehousing do not bear these extra per-parcel charges, creating a pricing gap.

• Higher customer disputes: Additional import taxes may be passed on to end buyers, triggering complaints, returns and negative reviews.

 

3. Practical solutions for Chinese cross-border sellers

Solution 1: Shift from direct mail to bulk shipment + EU overseas warehousing

Ship goods in bulk by sea, rail or truck to pre-stock inventory in EU warehouses. When orders come in, fulfill locally.

Bulk imports enjoy much lower unit customs costs compared with one-by-one small-parcel clearance. Fulfillment from local warehouses also guarantees faster delivery, improves conversion rates and strengthens competitiveness on marketplaces including Amazon, Bol.com and eMAG.

Solution 2: Optimize product portfolio and abandon ultra-low-margin SKUs

Phase out cheap, low-value items that cannot sustain extra tax costs. Focus on differentiated, medium-to-high value products with sufficient gross margin to cover tax and logistics expenses. Conduct landed cost recalculation for each SKU and adjust retail pricing rationally.

Solution 3: Complete EU compliance preparation in advance

Register local EU VAT numbers, and get ready for EPR, PPWR packaging compliance and relevant product certifications such as CE, REACH and WEEE.

Keep complete test reports, product labels and customs declaration documents to cope with intensified customs inspections and prevent inventory seizures.

Solution 4: Diversify sales channels

Reduce over-reliance on single platforms. Expand regional European marketplaces like Bol.com for Benelux and eMAG for Southeast Europe. These platforms have relatively lighter competition and stable local consumer groups, helping sellers spread operational risks.

Solution 5: Adjust pricing and communicate clearly with buyers

Recalculate all-in landed costs including VAT, duties and clearance fees. Either raise product prices moderately or optimize logistics solutions to offset cost increases. Clearly inform customers about potential import charges before checkout to reduce after-sales conflicts.

 

4. Final outlook

The end of the €150 small-parcel exemption marks the end of the low-threshold dropshipping era into the EU. Cross-border e-commerce in Europe has entered a compliance-driven period.

Chinese sellers who actively switch to overseas warehouse models, optimize product structure and fully complete compliance work can still capture steady market share. Those who stick to traditional direct mail without adjustments will face mounting cost pressure and survival challenges.