New EU VAT Rules to Reshape E-Commerce Imports Starting July 2028

New EU VAT Rules to Reshape E-Commerce Imports Starting July 2028

Approved by the Economic and Financial Affairs Council (ECOFIN) in May 2025, this reform is part of the EU’s broader VAT in the Digital Age (ViDA) initiative, aimed at simplifying compliance, improving transparency, and closing loopholes in the current VAT system. 

Key Changes:

– VAT Liability Shift: Sellers and platforms will be deemed VAT collectors at the point of sale. This replaces the current model, where sellers and platforms are shifting the liability to EU consumers who are subsequently charged VAT upon delivery. 

– Elimination of €150 Exemption: The €150 customs duty exemption for low-value goods will be abolished. All imports will be subject to customs duties and VAT, regardless of their value. 

– IOSS becomes default system: The Import One-Stop Shop (IOSS), previously limited to goods under €150, will be expanded to cover all imported goods, regardless of value. When not using IOSS, it will lead to complex multi-country VAT registration requirements. This makes IOSS the logical and viable system for handling VAT on e-commerce imports. 

– Simplified Tariff Regime: A simplified tariff treatment will be introduced for low-value consignments to ease customs valuation and reporting. 

– End of Special Arrangements: Postal services and couriers will no longer collect VAT at delivery. This change eliminates inconsistencies and delays in customs clearance. 

Implications for Businesses: 

Non-EU sellers must adapt their checkout systems to include VAT and register for IOSS or face complex multi-country VAT registration requirements. Marketplaces will need robust infrastructure to manage VAT collection and reporting across all 27 EU member states. 

The EU estimates that over 4.6 billion packages entered from non-EU countries in 2024 alone, highlighting the scale of the challenge and the importance of a streamlined system. 

A Step Toward Fairer Trade:

EU officials say the reform will create a level playing field for EU and non-EU sellers, reduce fraud, and enhance consumer trust. By ensuring VAT and customs duties are collected upfront, the EU hopes to make online shopping more predictable and transparent. 

Businesses are advised to begin preparations well ahead of the July 2028 deadline to ensure compliance and avoid disruptions.