A major overhaul of the EU import system is expected for the coming months, following last year’s proposed revision of the Union Customs Code and the upcoming publication of a new Commission’s communication on e-commerce imports from non-EU countries. The rationale behind this reform lies on the sheer volume of low value consignments worth less than €150 that are imported into the EU every day via B2C sales, as well as the increasing number of non-compliant products that are placed on the market, and the aggressive and competition distortive selling and marketing practices from some non-EU players. To address this fast-growing concern, the European Commission is brainstorming on the possible ways to ensure a level playing field for all companies operating in the EU Single Market.
One of the options to address the question consists in the removal of the €150 threshold for customs duty exemption. The abolition of the exemption, which matches the previous €22 VAT exemption removal of July 2021, will make sure that there will be no duty-free importation, achieving an equitable treatment for all import goods regardless of their value. Politically, the provision is endorsed by a vast majority of stakeholders, including Ecommerce Europe. Technically, the provision comes with some open questions as regards its effectiveness and the preparedness of the EU import scheme to bear the change. Concerning the effectiveness, some stakeholders have signalled that the removal of the customs exemption will not affect the original problem, i.e., the fraudulent shipments coming especially from China. In addition, risk-based assessment and detection of fraudulent shipments is already implemented by means of different EU tools, such as the Import Control System 2, the Entry Summary Declaration, etc.
Finally, it should be noted that should the removal be agreed upon in one single day, the EU and the Member States would require at least 3 years to implement the change. With regards to the preparedness, it is true that the current EU import scheme, which was introduced by the VAT E-commerce Package of July 2021, i.e., the Import One Stop Shop (IOSS), is not ready to cope with the increased number of full declarations that would be applicable from the day the customs exemption is lifted. This is evidenced by the fact that double taxation, IOSS number frauds, and an uneven IT infrastructure readiness among EU27 Countries are still affecting the IOSS operationality. Conscious of these problems, the European Commission is already working in combination with Member States’ tax and customs departments, as well as with businesses and stakeholders, to identify the best options to increase the IOSS security and resiliency. Despite these IOSS stability concerns, Ecommerce Europe believes that removing the customs exemption is one of the optimal solutions, but it should be accompanied by a more comprehensive and holistic approach to the issue, and should be preceded by the much-needed adjustments to the import scheme.
Another solution that has been proposed for addressing the high volumes of non-compliant imports includes fast-tracking the customs exemption removal and fostering the collaboration between the EU and the national governments, among Member States and businesses, as well as within the Member States’ tax and customs administrations, and finally also at international level. The goal is to roll out a wider strategy to tackle the fraudulent shipments that are imported from non-EU countries, especially via certain Chinese e-commerce platforms. To do so, the European Commission will publish a communication in mid-September that sets out the way forward for the EU and the Member States to ensure a level playing field between the EU and non-EU players.
The precise content and the publication date are, however, not officially confirmed, as the Commission is requiring time and consultation with other departments and stakeholders for ensuring that this communication is as impactful as possible. At the same time, different departments and Directorates-General of the European Commission are working to identify the best measures for addressing company-specific unfair trading practices, such as market distortive low prices, cheap or free international deliveries, misleading marketing activities, deceptive patterns, online safety of users, data breaches and violations, and more.
All these discussions happen at a time when the World Trade Organisation has signed an e-commerce agreement in late July, calling for a moratorium on imposing new customs duties and altering in any way the current state of play. Simultaneously, the European Commission and the Chinese government have renewed their customs controls cooperation to enhance fair and legitimate trade and ensure safety and security of supply chains and of traded goods. While the EU Customs reform is currently under debate in the EU Member States, and the European Commission is expected to publish the e-commerce communication in the coming weeks, the next months will be pivotal in the broader discussion around the level playing field in e-commerce imports in the EU.
Ecommerce Europe is actively engaged in these discussions and brings forward the feedback and expertise of its members for a thoughtful and comprehensive contribution to EU policymaking. Our Open Letter on the Level Playing Field, issued in July 2024, is at the core of our strategy and runs in concertation with our National Associations and the different types of players in the European e-commerce ecosystem (e-merchants, marketplaces, payment solutions providers, postal/logistical operators, etc) that are voiced by Ecommerce Europe.