A-Jie, who runs an Amazon store on the European marketplace, discovered two things in July 2026: low-value packages shipped to the EU are no longer “tax-free,” and customs authorities are verifying VAT payment receipts on a per-shipment basis; the French marketplace dashboard showed that the VAT rate had jumped from 20% to 21%.

It was only then that he realized that the EU’s implementation of the dual regulations on VAT and EPR in July 2026 was not just “empty rhetoric,” but a tangible change to customs clearance and declaration rules. This article explains the changes and calculates the exact amount of overpayment.

This article provides a comprehensive overview of the new EU VAT regulations for 2026, the elimination of tax-free thresholds, OSS/IOSS, tax representatives, and EPR packaging. It’s a must-read for anyone operating on European marketplaces.

01

The 150-euro tax-free allowance has been canceled.

The long-standing belief in the market that “packages under 150 euros are duty-free” is actually a misconception. The European Union abolished the duty-free status for small packages valued at less than 22 euros back in July 2021; 150 euros is merely the upper limit for the value of goods subject to the IOSS, and such packages are not duty-free in and of themselves.

Effective July 1, 2026, the European Union will further strengthen its full-scale verification of import VAT: All incoming parcels, regardless of their value, must be fully declared, and VAT must be paid in full. Customs officials will verify tax payment receipts on a parcel-by-parcel basis; any underreporting of value or concealment of item descriptions will result in the immediate seizure of the goods.

In a nutshell: By 2026, the gray area of “sell first, pay taxes later” will no longer exist in the EU. Taxes must be settled in full for every shipment during customs clearance.

02

How to Use OSS and IOSS

OSS (One-Stop Shop): Cross-border sellers who ship goods directly from their own facilities and have neither a permanent establishment nor a local warehouse in the EU may register for OSS in a single country to file a single VAT return covering all cross-border distance sales across EU member states, eliminating the need to register in each country individually. The uniform threshold for distance sales in 2026 is 10,000 euros per year.

IOSS (Import One-Stop Service): Applicable to direct-to-consumer (B2C) orders where the value of a single package is ≤150 euros; VAT is collected in advance by the platform or seller at the point of sale to expedite customs clearance. However, please note: If you have a local EU warehouse (FBA/overseas warehouse), you must register for local VAT separately in the country where the warehouse is located; OSS or IOSS cannot serve as a substitute.

Reminder: The platform’s automatic withholding of VAT does not exempt you from registration. If you have inventory in storage, you must still register and file your own returns; consistently filing zero returns or reporting amounts significantly lower than the platform’s data will trigger an audit.

If you’re facing a similar situation—running an Amazon Europe store, unsure how to choose between OSS, IOSS, and local VAT, and worried that tax hikes in France will eat into your profits—we can help you set up your EU tax structure. Scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671), and we’ll help you sort out this entire process from start to finish.

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03

Tax rates have gone up, and representatives have made it mandatory

Standard VAT rates in major countries for 2026: Germany 19.1%, France 20.1% → 21.1% starting in 2026, Italy 22.1%, Spain 21.1%, Netherlands 21.1%. The increase in France represents the most immediate cost increase in this round.

Starting March 1, 2026, non-EU sellers must designate a licensed tax representative within the EU to assume joint liability for tax filing and compliance; existing sellers must complete the retroactive registration by September 1, 2026. Without a tax representative, the filing process cannot proceed.

Consequences of Noncompliance: Platforms may freeze funds, restrict sales, or even suspend accounts; fines and late payment penalties in various countries are calculated on a sliding scale based on the amount of back taxes owed and the duration of the delinquency, and penalties for willful tax evasion are significantly more severe.

04

EPR packaging has also been upgraded

In line with VAT regulations, the EU will strengthen its Extended Producer Responsibility (EPR) requirements for packaging in 2026: All goods entering the EU with packaging must complete EPR registration and filing for packaging; sellers of electronics, battery-powered products, and textiles must also comply with additional EPR requirements specific to their respective categories.

Cost Side: Packaging recycling fees have generally increased across member states, with plastic packaging fees rising by approximately 151 TP3T. Germany and France are already verifying EPR compliance at customs; non-compliant goods may be detained, returned, or destroyed.

Seller On-the-Ground Operations: Determine whether to use a local warehouse, identify the key target countries, and match products to their corresponding EPR categories; then register for a VAT number, appoint a tax representative, and register for EPR as needed. Use recyclable, lightweight packaging to offset rising recycling fees.

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05

Exactly how much extra did they pay?

Let’s do the math: A small package shipped directly with a declared value of 20 euros might previously have been subject to a low IOSS prepayment rate or non-compliant practices; in 2026, it will be required to prepay the full amount based on the destination country’s standard tax rate (e.g., France’s 21%), causing the tax burden per item to jump from “virtually negligible” to nearly 20 percent of the goods’ value.

Sellers with local warehouses must bear the costs of registration, a tax representative, and EPR annual fees in addition to VAT. While fixed compliance costs are rising, this ensures store stability and prevents account suspension. Profits from the low-price inventory-stocking model are being further squeezed.

In a nutshell: When expanding into Europe in 2026, compliance costs will go from being an “optional expense” to an “entry fee.” Factoring VAT, EPR, and tax representation into your pricing is far more cost-effective than facing penalties and back taxes later on.

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