EU goes after Temu and co
To facilitate cheap imports from China, the EU plans to abolish tax-free status for smaller shipments. The threshold of 150 Euro could fall as early as this month, which would mainly affect Temu and Shein.
For parcels with a value below 150 Euro, no customs duties have been payable upon entry into the EU so far. This advantage is particularly beneficial for low-priced traders from the Far East. Estimates suggest that around two billion such packages came from third countries to the European Union last year. To curb this tide, the EU Commission is reportedly planning to abolish the current threshold of 150 Euro this month, according to the "Financial Times" (FT), citing three sources familiar with the matter. These regulations would apply to every online trader supplying customers in the EU directly from a third country.
The main platforms targeted are reportedly the Chinese online marketplaces Temu and AliExpress, as well as the clothing retailer Shein, according to an EU official. The Commission had already tabled reform plans in May 2023, and their implementation is now being accelerated to stem the tide of cheap imports.
The European Ecommerce Europe association has already expressed criticism of the possible abolition of exemptions. Companies fear retaliation from EU trading partners.
Another EU official warned the FT that it might be difficult to get EU countries to agree to the new regulation, as it would increase the workload of already overburdened customs officials. German Finance Minister Christian Lindner is said to have signaled to the HDE trade association that Germany would support an end to the 150-Euro regulation on a European level. The Finance Ministry stated last month that it would not comment on specific cases. However, it welcomed the EU Commission's proposals to adapt customs regulations to the challenges of online trade.
Another possible measure would be to require large platforms to register for VAT payments independently of their value online. Since 2021, packages sent to EU companies have been subject to VAT, regardless of their value, but are still duty-free.
According to its own statements, Temu's growth is not dependent on regulations for duty-free import of goods. The company is "open to all political adjustments from legislators that align with consumer interests," as long as they are fair. AliExpress stated that it is working with legislators to ensure that the company remains in a compliant position on the EU market and will continue to do so in the future. Shein stated that it fully supports the efforts to reform taxes.
The EU Commission's plan to abolish the tax-free status for smaller imports could impact online trading platforms like Temu and Shein, as their customers in the EU primarily benefit from this advantage. This move, aimed at curbing cheap imports from China, aligns with the EU Commission's reform plans earlier this year.
