The European Union has closed a tax loophole that allowed online retailers such as Shein, Temu and Aliexpress to undercut European competitors, bringing an estimated 2.3 billion untaxed parcels each year under standard taxation regimes. Starting today, a flat €3 customs duty applies to low-value e-commerce imports, ending the exemption for goods worth under €150 that non-EU sellers exploited to flood the European market with cheap, often unsafe products.
The change removes the artificial price advantage enjoyed by platforms shipping directly from China and is meant to level the playing field for traditional high street and online retailers across the bloc. It's part of a broader effort to address what the European Council describes as unfair competition, unsafe products, fraud and the environmental impact of large volumes of cheap imports.
How the New Rules Work
The duty applies according to the item's type, based on the Harmonised System commodity code. If a package contains a textile item, footwear and a tech product, it faces a €9 charge because three different codes are triggered. If a package contains multiple items of the same type, the €3 charge applies only once. The measure applies to non-EU sellers registered under the Import One-Stop Shop VAT system, which accounts for 93% of all e-commerce imports into the EU. Enforcement relies on digital sales logs transmitted directly to authorities.
Under previous rules, consumers were legally considered the importer when ordering a non-EU package, and platforms acted only as intermediaries. As of March 26 this year, the new EU Customs Code Reform removes that shield by legally reclassifying digital marketplaces as deemed importers. That makes them liable under EU product safety laws, including the General Product Safety Regulation, and exposes them to severe financial penalties or market bans for non-compliance.
The new duty will stay in force until a broader permanent system for low-value imports, agreed less than one year ago as part of wider customs reforms, takes effect. In two years, the permanent EU Customs Data Hub will go live, removing the €150 threshold entirely and taxing every item dynamically from the first cent.
The Safety and Environmental Crisis
Dirk Gotink, a Dutch MEP for the EPP, said the urgency was so big that there was deep political consensus. He added that the measure was slow to arrive "because countries were slow to accept that, to do something about the tsunami of non-compliant [fast fashion] products, you need to integrate European customs."
Laura Clays, spokesperson for consumer organisation Testachats, said only 0.006 per cent of parcels get checked by customs. "The number of products coming into Europe means not all of them can be tested," she said. She also said, "International e-commerce offers lots of opportunities for consumers. But any product entering the EU market must comply with safety, consumer protection and environmental standards. That is our goal: to ensure products entering Europe meet the same standards as those made in the EU."
Independent assessments by European consumer groups, including Testachats, found that around 70 per cent of the products did not comply or did not fully comply with all EU safety requirements. A Greenpeace Germany investigation found that 32% of tested apparel contained illegal concentrations of hazardous substances, including heavy metals, formaldehyde and PFAS "forever chemicals" in jackets at levels up to 3,300 times the legal European threshold. Safety checks on toys and children's clothing also uncovered serious non-compliance, including dangerous shapes and loose components that posed a high choking risk.
Gotink said fast fashion has destroyed the second-hand market in Europe and caused huge unfair competition for European clothing brands. "The taxpayer pays a high price for this trade: fast fashion can contain chemical substances that shouldn't be in Europe, like PFAS," he said. He also called it "tax avoidance on an industrial scale, basically."
The hyper-production of ultra-fast fashion goods also generates a major environmental toll, with billions of individually packaged items flown directly from Chinese factories to consumers, increasing aviation emissions compared with bulk maritime shipping.
What It Means for Shoppers and Businesses
European shoppers will face higher prices and longer waiting times. A typical low-cost online order worth €20 could exceed €30 once the new fees are added. For example, a €10 summer dress and a €10 pair of sunglasses would trigger two separate €3 category duties, adding €6 to the bill. With the planned €2 handling fee, the final checkout price would reach €28, a 40% increase on a basket of cheap goods. Customs agents must digitally screen every package, and border checkpoints are likely to face backlogs. The changes also remove surprise cash-on-delivery charges because all duties must be paid upfront at checkout.
For companies, marketplace apps such as Shein, Temu and AliExpress must either absorb the compliance costs or risk losing price-sensitive shoppers through price rises. Analysts estimate a shift to local distribution hubs could erase up to 40% of profit margins, while penalties for non-compliance could reach 6% of annual import values. Cross-border e-commerce exports reached 2.75 trillion yuan, about €350 billion, in 2025.
For European businesses, the new rules remove the artificial price advantage enjoyed by non-EU sellers and bring the 2.3 billion untaxed parcels into standard taxation regimes. Traditional high street and online retailers can regain competitiveness, and domestic fast-fashion brands such as Zara and H&M can better exploit their European supply chains.
Gotink said investment is now essential. "What the EU and especially member states need to do is invest massively in their ability to control the products that are coming into the European market," he said. He also said, "The fast fashion sector, as it works now, is simply unsustainable as an economic model. I hope we will be able to stop the non-compliant and overly cheap trade flows, where consumer goods are used once and then thrown away."
Why This Matters:
This isn't just about tax fairness — it's about protecting consumers from dangerous products and European workers from a race to the bottom. For years, platforms like Shein and Temu exploited a legal loophole to flood the EU with billions of untaxed, untested goods, many containing illegal chemicals at levels thousands of times over safety limits. The new rules finally hold these companies accountable and give European retailers a chance to compete on equal terms. But enforcement depends on member states investing in customs capacity — without that, the policy risks becoming another unfunded EU mandate. The shift also highlights a deeper question: can Europe defend high social and environmental standards in a globalized economy without pricing ordinary consumers out of the market? The answer depends on whether governments use the revenue from these duties to fund inspection systems, support workers in European textile industries, and invest in sustainable alternatives to throwaway fashion.