Since July 2021, the Import One-Stop Shop scheme (or IOSS), has been simplifying VAT collection for non-EU eCommerce businesses selling low-value goods into EU member states.
IOSS, however, doesn’t remove customs obligations and doesn’t protect brands from how individual EU member states are beginning to process low-value inbound shipments.
Five years since its introduction, this distinction is set to completely change how retailers ship products into the EU.
In this article, fulfilmentcrowd explores the EU’s upcoming changes set to hit brands from July 1st, and five action points retailers should consider ahead of the deadline.
First, a definition
IOSS is the EU’s VAT simplification scheme for distance sales of imported goods in consignments that don’t exceed €150.
It allows sellers to report and pay import VAT across eligible EU consumer sales through one registration, meaning shoppers get a clean, familiar checkout experience with no unexpected charges.
In July 2025, however, the EU Council formally decided on changes to make suppliers more responsible for import VAT on a wider range of low-value eCommerce sales.
Perhaps the most discussed change is the removal of the customs duty exemption for parcels valued below €150.
The EU has agreed to introduce a temporary €3 per-item customs duty from July 2026, while broader customs reform infrastructure – including the EU Customs Data Hub (2028) – is built.
For brands shipping into the EU, July 2026 will introduce a direct cost increase on low-value imports that sits outside of VAT compliance.
The question for many brands has shifted from “what’s changing?” to “what do I need to do about it?”
It’s not easy to provide an answer that will work for every brand, but there are some action points every retailer can take to understand where their focus should be ahead of 1st July.
Not aware of these changes? Read fulfilmentcrowd’s previous IOSS article for our blog.
Action 1: Start with your own data, not market reports
Before looking for guidance elsewhere, it’s vital to assess where your business currently stands.
Your brand’s data will highlight any gaps or problem areas ahead of the upcoming changes, meaning you can identify where you need to invest time or strategy.
Some key areas to review include:
- Revenue by country
- Order volume by country
- Growth rate by country
- Conversion rate by country
- Returns rate by country
Many retailers are surprised to discover that they already have demand in some EU territories.
With customs changes around the corner, understanding your EU data should be top of your priorities list.
Action 2: Identify areas that could limit growth
Put simply, shipping into the EU is about to become more complex and more expensive.
If you’ve got areas of demand that could be impacted by customs changes, it’s important to ask yourself:
- Will shipping costs change?
- Will delivery times be impacted?
- How do we avoid customer uncertainty?
- Will returns become more difficult or expensive?
According to fulfilmentcrowd data, 40% of shoppers are deterred by high shipping costs when buying internationally, and 34% are put off by customs fees.
If you’re forecasting that IOSS changes could impact your costs or customer experience, your EU demand could be at risk.
The last thing your customers want is an unexpected cost increase or a new customs charge at checkout.
This situation is one that many brands will be facing ahead of July 1st, meaning a difficult balancing act could be just around the corner.
Action 3: Calculate your new cost-to-serve
Revenue is only half the story. Many retailers know how much revenue a region generates, but fewer know if it costs more to serve than it should.
With low-value imports set to incur an extra €3 per-item customs duty, shipping into the EU is about to impact margin calculations even further.
If you’re serving multiple territories with higher levels of demand, it’s worth pulling a country-by-country profitability report that explores:
- Revenue
- Gross margin
- Average consignment value
- Fulfilment costs
- Returns costs
- Customs duties
- Net contribution
With this overview, you’ll be able to assess your cost-to-serve per region and where IOSS changes set to have the biggest effect.
Action 4: Assess stock localisation as a strategy
This is the decision many retailers are now facing, and it’s not a straightforward one to answer.
Each retailer is different, and even in cases of high demand, product type, range or value could sway your decision one way or another.
Rather than asking whether your brand should localise stock, it’s better to ask: “When does localisation improve customer experience enough to justify the investment?”
Signs that you’re approaching the point of localisation becoming an effective strategy could be:
- Consistent demand from a specific territory
- Delivery times limiting growth
- Higher shipping costs impacting conversion
- Returns becoming expensive or difficult to manage
- Customer expectations becoming harder to meet
When you localise stock in-country, you can act as a domestic brand, reducing delivery times and lowering returns costs. As well as these trust-building benefits, you’ll also hold stock in-region or import in bulk, meaning parcel-level import fees no longer apply.
If you’re shipping larger volumes into the EU and you find that local stock improves conversion and reputation enough to offset warehousing costs, stock localisation should be a serious consideration ahead of July’s EU regulation changes.
Action 5: Think about peak, not just IOSS changes
July’s changes are one thing, but peak 2026 will be the real test of the operating model you opt for.
As all retailers are aware, every weakness is amplified during peak, including:
- Inventory visibility
- Delivery performance
- Returns processing
- Customer communication
Waiting until October to assess your EU model is likely already too late, and your business could come under pressure as volumes scale.
If multiple orders are held at customs or you’ve not planned for an increase in import charges across higher volumes, it could have a reputation-damaging or financial effect on your brand.
Way ahead of peak and with the EU changes in mind, ask yourself:
- Can we scale at current volumes?
- Do we have visibility across markets
- Will returns eat into margin at higher volumes?
- Are customers receiving a consistent experience?
Taking these questions and our other suggested actions into account means you’ll be better prepared for a peak set to be influenced by growing customs pressures.
Preparing for what’s to come
The reality facing many brands is that these changes will make it more expensive to ship low-value goods into the EU.
Additional customs costs and growing customer expectations will place further strain on already tight margins, as well as introducing new administrative requirements to retailers.
However, this doesn’t mean brands should dismiss the EU entirely. It just means retailers need to become more strategic in how they serve the market.
The right solution will differ for every brand. What needs to be consistent is retailers working closely with their fulfilment partners to understand the full impact of changes to come.
For some, continuing to ship cross-border will remain the most suitable model. For others, higher volumes will justify stock localisation to create a more competitive proposition for EU customers.
The retailers that win this latest customs battle will be those using data to understand where demand exists and relying on expert fulfilment providers to evolve their strategy in a way that supports long-term growth.
If you’d like to learn more about growing in the EU, read IMRG’s latest report with fulfilmentcrowd, available to download here: EU Expansion Report 2026: How Growing Retailers can Scale into the EU
Published 15/06/2026
