Major EU Customs Overhaul on July 1, 2026: Full Abolition of the €150 Duty-Free Allowance—How Should Hong Kong Shippers Respond?

Policy Shift: The EU Ends the Era of “Small Value Tax Exemptions”

On July 1, 2026, EU Customs will undergo one of the most significant policy changes in recent years. The European Council has officially approved the complete abolition of the long-standing customs duty exemption (De Minimis Exemption) for small parcels valued below €150 (approximately HK$1,250). This means that from July 1, all low-value goods entering the EU, regardless of the amount, will be subject to strict customs duties.

The core of this reform, dubbed the “Customs Earthquake,” involves a fixed customs duty of €3 for every low-value item based on its Harmonized System (HS) code category. This measure will serve as a transitional arrangement until July 1, 2028, after which it will switch to standard duty rates. Furthermore, the EU is expected to introduce an additional handling fee of €2 per parcel in November 2026.

Simultaneously, the second version of the EU Import Control System (ICS2) will become fully mandatory on the same date. This requires an Entry Summary Declaration (ENS) to be submitted for every shipment at least one hour before arriving at the EU border, containing information on both buyer and seller, a six-digit HS code, and a detailed description of the goods. Any non-compliance could result in fines of up to €5,000.

The Ripple Effect: Why is the EU Taking Such Drastic Action?

The EU’s move is not without reason. In recent years, with the explosive growth of cross-border e-commerce, a massive volume of low-priced parcels from Asia (particularly China) has flooded the European market. Data shows that in 2024, the EU received as many as 4.6 billion small parcels, 91% of which originated from China.

This massive volume of small parcels has not only placed immense regulatory pressure on customs authorities across EU member states but has also sparked deep concerns regarding the competitiveness of local retail industries. Many low-priced goods have evaded customs duties and Value Added Tax (VAT) by breaking down shipments into smaller units, creating unfair competition for European businesses.

Additionally, the EU aims to protect consumer rights by raising import thresholds to combat the influx of substandard and counterfeit goods. Therefore, the abolition of the €150 duty-free allowance is seen as a crucial step for the EU to reshape a fair trade environment and strengthen market surveillance.

Hong Kong Shippers Bear the Brunt: Surging Costs and Model Transformation

For Hong Kong cross-border e-commerce sellers and exporters who rely on the European market, this new policy is undoubtedly a heavy blow. The impact is primarily reflected in the following areas:

1. Fundamental Change in Cost Structure

A fixed duty of €3 may be negligible for high-value items, but for low-priced goods with an average order value of €10 to €20 (such as phone cases, accessories, and small appliances), the cost increase could be as high as 15% to 30% or more. This will directly erode already thin profit margins, presenting a severe challenge for sellers who rely on a “high volume, low margin” model.

2. Significantly Higher Compliance Thresholds

The mandatory implementation of the ICS2 system means that shippers must possess superior data management capabilities. Accurately providing six-digit HS codes, detailed cargo descriptions, and timely ENS declarations will become essential requirements for customs clearance. Any missing or incorrect information could lead to cargo detention, delays, or even heavy fines.

3. Forced Transformation of Supply Chain Models

Faced with high direct-mail costs and strict clearance requirements, the traditional B2C direct-mail model will no longer be advantageous. Leading e-commerce platforms have already begun adjusting their strategies, such as shifting a large number of European orders to local warehouse fulfillment. For Hong Kong shippers, accelerating the deployment of overseas warehouses, enhancing brand premiums, and pivoting toward high-value-added products will be the only way to survive in the future.

Response Strategies: Finding Opportunities Amidst Change

Faced with the new EU customs regulations, Hong Kong shippers cannot afford to wait and must take proactive measures:

1. Re-evaluate Product Pricing and Profit Margins: Incorporate the new €3 duty and future handling fees into cost calculations, adjust retail prices, and phase out inefficient SKUs where profits cannot cover costs.
2. Strengthen Customs Data Compliance: Ensure that HS codes for all exported goods are accurate and provide detailed descriptions in strict accordance with ICS2 requirements. Avoid using vague or ambiguous product names.
3. Optimize Logistics and Warehousing Layout: Consider pre-stocking best-selling items in local European or bonded warehouses to import in bulk via B2B models, thereby reducing per-unit clearance costs and logistics lead times.
4. Seek Assistance from Professional Logistics Partners: Choose logistics service providers with strong customs clearance capabilities and extensive experience in European dedicated lines to ensure goods enter the EU market smoothly and compliantly.

Conclusion

The EU’s abolition of the €150 duty-free allowance marks the end of the era of “wild growth” for cross-border e-commerce. Compliance, branding, and localization will become the core competencies for competing in the European market in the future. In a complex and ever-changing international trade environment, you need a reliable logistics partner.

The HLT professional team provides precise manual follow-up to solve your customs clearance challenges. Handle logistics troubles.

References:
[1] DHL. (2026). Explanatory Note on the Latest EU Customs Regulatory Updates. https://www.dhl.com/discover/zh-tw/ship-with-dhl/export-with-dhl/eu-customs-regulatory
[2] Xinghuo Cross-border. (2026). EU to Abolish Tax Exemption for Small Parcels Under €150 Starting July 1. https://xinghuos.com/6705.html