The EU Commission proposes to abolish the duty-free regime – it will become more expensive to order small goods from outside the EU  

Until now, the European Union has supported online stores and marketplaces in China, the United States and other non-EU countries by exempting low-value orders from customs duties. Under the current duty-free regime, it has been beneficial for consumers to order products from outside the EU up to a value of EUR 150, as they have not had to pay any customs duty. Customs duties are only paid for orders with a value of more than EUR 150.

The Finnish Commerce Federation has long advocated the abolition of duty-free regime as part of guaranteeing equal conditions for competition.

“The removal of duty-free regime as proposed by the Commission would be a very welcome change. Competition between companies will become fairer when sellers and marketplaces outside the EU will no longer be able to sell their products at a price that is lower by the amount of the customs duty,” says Toni Jääskeläinen, Chief Policy Adviser of the Finnish Commerce Federation.

Finnish shops purchase products from outside the EU in large quantities, so the customs duty must be paid at the time of import.

“Customs raise the consumer prices of a Finnish company, which creates an unfair competitive advantage for a company outside the EU. Due to the customs subsidy, it is able to sell its products at a price that is lower by the amount of the customs duty,” Jääskeläinen explains.

Inequality between companies is also evident in value added tax 

The unequal treatment of companies is not limited to import duties. The duty paid also affects value added tax.

“The basis for value added tax is the value of the product sold, exclusive of tax. As the value includes customs duties, it also increases the share of value added tax in the product’s price,” says Jääskeläinen.

In addition to the equalisation of competition, the removal of the duty-free regime proposed by the European Commission is an effective way of tackling fraud. According to the Commission, in up to 65 per cent of the cases, the value of parcels entering the EU is under-declared by those who ordered them in order to avoid import duties. In taxation, the corresponding tax exemption for low-value orders was abolished during 2021.

According to the Finnish Commerce Federation, the abolition of the tax exemption is an excellent example of a successful change, as the Commission has announced that the change has increased the tax revenue of EU countries by a total of EUR 690 million. It is estimated that the abolition of the duty-free regime will increase annual revenues in the EU countries by a total of EUR 750 million.

Reduced bureaucracy for consumers

In the context of the customs reform, the Commission will also simplify customs procedures and increase sellers’ responsibilities. Currently, as a customer, the consumer is typically responsible for the customs declaration and the payment of customs duties.

With the reform, marketplaces would be considered importers of consumers’ online purchases, so that customs obligations would be transferred to them. For consumers, buying from marketplaces outside the EU would become simpler with less bureaucracy.

“The proposed reform is therefore a step in the right direction, but measures are still needed to ensure that consumer protection, product safety and environmental responsibilities, among other things, are also realised in international marketplaces,” Jääskeläinen points out.

Further information: Toni Jääskeläinen, Chief Policy Adviser, Finnish Commerce Federation, tel.  +358 (0) 50 533 0619, toni.jaaskelainen(at)kauppa.fi