EU tax break reform to impact non-EU vendors

July 5, 2024

The EU is considering ending import duty exemption for low-value imports like printer cartridges.

Germany advocates for the European Union to abolish a tax exemption on imports valued under 150 euros ($162). This move targets non-EU vendors like fast-fashion giants Shein and Temu, which benefit from the current exemption to offer low-priced goods. However, the reform will also impact other non-EU producers, including printer consumables sellers who use online platforms to benefit from the tax break.

German retailers argue that the exemption floods the market with cheap parcels overwhelms customs, and avoids compliance checks. The proposed reform, part of a broader EU customs overhaul, aims to level the playing field for EU businesses by ensuring that all imports are subject to the same tax regulations.

The import tax exemption allows non-EU producers to sell products at significantly lower prices than their European counterparts. By avoiding the import duty, these companies can pass on cost savings to consumers, making their products more attractive in a competitive market. German officials claim that this practice undermines local businesses and results in lost tax revenue for EU member states.

In July 2021, the EU introduced new VAT e-commerce rules to promote fair competition for EU businesses and reduce VAT losses from low-value imports. These rules simplify the collection of import VAT on online purchases and impose new obligations on marketplaces and platforms for goods imported from third countries in consignments not exceeding EUR 150.

David Connett, Partner at Connett & Unland GbR, commented, “This change, if implemented, brings import duty requirements in line with VAT requirements and would be another step in removing a concession not enjoyed by EU producers. It’s about creating fair competition and ensuring that all market players adhere to the same tax obligations.”

The European Parliament has noted that consumers increasingly order goods from third countries online, often failing to meet EU safety or environmental standards. Furthermore, approximately 65% of parcels entering the EU are deliberately undervalued, leading to significant revenue loss.

By removing the exemption, the EU hopes to promote more sustainable consumption patterns and reduce the environmental footprint of imported goods.