The European Commission proposed a reform of the EU customs union on Wednesday, which, among other things, introduces customs duties for products valued below 150 euros.
The proposed reform abolishes the current threshold under which goods valued at less than 150 euros are exempt from customs duties, a loophole that fraudsters have widely exploited. The Commission states that it is a common practice to undervalue packages entering the EU to avoid paying customs duties.
According to the new proposal, online platforms will become key players in ensuring that goods sold online in the EU meet all customs obligations. This marks a significant shift from the current customs system, which places the responsibility on individual consumers and carriers. Platforms will be responsible for ensuring the payment of customs duties and VAT at the time of purchase, so consumers will no longer be exposed to hidden fees or unexpected paperwork when collecting packages.
As online platforms are official importers, consumers in the EU can be assured that all fees have been paid and that their purchases are safe and compliant with the EU’s environmental, safety, and ethical standards.
The calculation of customs duties for the most common low-value products purchased from outside the EU is also simplified, reducing thousands of possible customs categories to just four. This will significantly ease the calculation of customs duties for small packages, helping both platforms and customs authorities better process the billion items purchased through e-commerce that enter the EU each year.
The new, tailored e-commerce regime is expected to generate additional customs revenues of one billion euros annually.
Commissioner for Economy Paolo Gentiloni stated that the introduction of customs duties on goods valued below 150 euros should not lead to an increase in consumer prices.
– That is not our goal. Customs duties on small packages will be very low. We expect that revenues from e-commerce for member states will reach one billion euros annually, simply because a larger number of packages will be minimally taxed – said Gentiloni.
The most comprehensive reform of the customs union
The proposal foresees the establishment of a new EU customs authority that will oversee the customs data center. Over time, the data center will replace the existing customs IT infrastructure in EU member states, saving them up to two billion euros in operational costs annually. The new body will also assist in achieving improved access for the EU to risk management and customs checks.
In the reformed EU customs union, businesses wishing to import goods into the EU will be able to enter all information about their products and supply chains into a single online environment: the new EU customs data center. Using state-of-the-art technology, data provided by businesses will be collected, and with the help of machine learning, artificial intelligence, and human intervention, authorities will be enabled to have a comprehensive overview of supply chains and the movement of goods.
The Commission emphasizes that this is the most comprehensive reform of the EU customs union since its establishment in 1968. Turkey is also a member of the customs union, which means it can trade with the EU without customs duties, but it cannot have its completely independent trade policy.
On the other hand, the former EU member Great Britain did not want the “Turkish option” and opted to leave the customs union, which creates significant problems in Northern Ireland.
“Today’s long-awaited reform is part of our plan to strengthen the EU’s open strategic autonomy. It will enable EU customs authorities to better defend our financial and economic interests while simultaneously ensuring the safety and protection of goods entering the EU,” stated Executive Vice-President of the Commission Valdis Dombrovskis.
The Commission’s proposal needs to be approved by the EU Council and the European Parliament.
