Quick answer: From July 1, 2026, a new customs duty of 3 euros per distinct item applies to all e-commerce parcels entering the European Union where the goods are valued at 150 euros or less. This replaces the previous duty exemption. Canadian online sellers shipping to EU consumers must understand two customs entry pathways: H7 (simplified e-commerce declaration for low-value B2C shipments) and H1 (traditional full customs entry for higher-value or commercial shipments). Registering for IOSS (Import One-Stop Shop) lets Canadian sellers collect VAT at checkout and use the streamlined H7 process.
New Rule Effective July 1, 2026
The EU has eliminated the customs duty exemption for e-commerce parcels valued at 150 euros or less. A flat 3 euro duty per distinct item category in each parcel now applies across all 27 EU member states. An additional 2 euro handling fee per consignment applies from November 2026. VAT (ranging from 17% to 27% depending on the member state) continues to apply on top of the duty.
In this guide
From July 1, 2026, a new customs duty of 3 euros for each distinct item category in a parcel applies to goods purchased online from non-EU countries, including Canada. This change applies uniformly across all 27 EU member states.
The duty is assessed per distinct item category (including tariff sub-category) in the shipment, not per parcel. For example:
Example 1: A package from Canada contains a pen, a notebook, and a key ring. Each distinct item has a 3 euro duty charge: 3 items x 3 euros = 9 euros customs duty, plus VAT.
Example 2: A package contains two identical pens. These are considered one item category: 1 category x 3 euros = 3 euros customs duty, plus VAT.
Example 3: A Canadian Shopify seller ships one silk scarf and four wool scarves. Silk and wool fall under different tariff sub-headings, creating two distinct categories: 2 categories x 3 euros = 6 euros customs duty, plus VAT.
From November 2026, an additional 2 euro handling fee per consignment will also apply.
This change is designed to ensure competitive fairness for EU-based businesses. There are a lot of discussions regarding the €2 fee and might be amended prior to the planned implementation.
When goods arrive at an EU border, they must be declared to customs through a formal entry. The EU customs system offers two distinct declaration types for imports, and understanding the difference is essential for Canadian e-commerce sellers:
The H7 dataset is a streamlined customs declaration designed specifically for B2C (business-to-consumer) e-commerce shipments valued at 150 euros or less. It was introduced as part of the EU's July 2021 e-commerce VAT reform alongside the IOSS system.
Key characteristics of H7:
July 2026 change: Before July 1, 2026, H7 shipments cleared with zero customs duty (only VAT applied). From July 1, 2026, H7 shipments are subject to the new 3 euro per item duty in addition to VAT. The H7 simplified declaration process itself remains available — only the duty treatment changes.
The H1 dataset is the standard, full-format customs declaration used for all imports that do not qualify for H7 simplified treatment. This includes:
Key characteristics of H1:
| Feature | H7 (Simplified) | H1 (Traditional) |
|---|---|---|
| Value limit | 150 euros or less | No limit |
| Typical use | B2C e-commerce parcels | B2B, high-value, commercial |
| Data fields | ~15 (simplified) | 50+ (full dataset) |
| HS code required | Simplified description | Full 8-10 digit CN code |
| Customs duty (from July 2026) | Flat 3 euros per item category | Full tariff rate by HS code (CETA 0% if qualified) |
| VAT collection | Via IOSS at checkout or on delivery | Collected at import by customs broker |
| EORI required | Not for the buyer | Yes (importer of record) |
| CETA preference available | No (flat rate applies) | Yes (0% duty with origin declaration) |
| Brokerage cost | Minimal (bulk filed by carrier) | 15 to 50 euros per entry |
Jet Worldwide offers Canadian e-commerce sellers access to H1 clearance for their European orders. This program offers a significant discount versus couriers and a for superior service to postal options. Contact our team for details.
The Import One-Stop Shop (IOSS) is an EU VAT registration mechanism that allows non-EU sellers (including Canadian e-commerce businesses) to collect VAT at checkout and remit it to a single EU member state, which then distributes it to the destination country.
Better customer experience: When you collect VAT at checkout via IOSS, your EU customer pays the final all-in price and receives the parcel without any surprise charges on delivery.
Faster customs clearance: Parcels with a valid IOSS number clear customs more quickly.
H7 simplified declaration: IOSS shipments are declared through the H7 simplified process, reducing data requirements and compliance costs per parcel.
Applies only to B2C under 150 euros: IOSS covers distance sales of goods with an intrinsic value of 150 euros or less shipped from outside the EU to consumers. B2B sales and higher-value shipments require the H1 process.
They are discussions to expand IOSS to include higher value values beyond €150. While, the outcome remains uncertain, we predict there will be a higher threshold for IOSS VAT payment in 2027.
Non-EU sellers must appoint an IOSS intermediary established in the EU. The intermediary registers on behalf of the Canadian seller in one EU member state, and that single registration covers sales to consumers in all 27 member states. The Canadian seller receives an IOSS VAT identification number (format: IMxxxxxxx) which is provided to the carrier on each shipment.
Jet Worldwide can assist Canadian e-commerce businesses in connecting with IOSS intermediaries and integrating the IOSS number into shipping workflows. Contact our team for IOSS guidance.
EU consumers will pay the 3 euro customs duty per item in one of two ways, depending on the terms and conditions of the selling business:
Some websites will be set up to collect the duty at the point of sale.
Other websites may not collect the duty at checkout. In this case, the delivery company (for example, the national postal service or a courier such as FedEx, UPS, or DHL) will require the consumer to pay the 3 euro duty per item before the goods can be delivered. Most carriers also add a disbursement or handling fee (typically 5 to 15 euros) for collecting duty and VAT on behalf of the consumer.
Recommendation for Canadian sellers: Contact our team to explore direct shipping options and dedicated clearance processes.
The new rules significantly affect the returns process for goods purchased from outside the EU:
Implication for Canadian sellers: Your returns policy and terms of service should clearly state whether customs duty and VAT are refundable on returned goods.
Under the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), most Canadian-origin goods can enter the EU duty-free (0% tariff) when accompanied by a valid origin declaration on the commercial invoice.
However, CETA preferential treatment applies only to H1 (full customs) declarations, not to H7 simplified e-commerce entries.
This creates an important strategic decision for Canadian sellers:
For most low-value e-commerce shipments, the H7 route with the 3 euro flat duty is more practical and cost-effective than filing an H1 entry with CETA origin documentation. But for higher-value Canadian-made goods (handcrafted products, premium food, specialized equipment), the H1 with CETA 0% duty may save money, especially on multi-item orders where the flat 3 euros per item would otherwise add up.
Read more: Country of origin vs. country of shipment
There is no customs duty if goods are located in an EU country at the time the order is placed. The 3 euro duty applies only to goods shipped from outside the EU.
Some websites may appear as if the business is EU-based — by using a local domain (for example, a ".ie" or ".de" domain), showing prices in euros, or displaying a European return address — but the goods may actually be shipped from a non-EU country such as China, the United Kingdom, or Canada.
For EU consumers: Check the website's "Terms and Conditions" or "About Us" page to confirm the physical business address and the location from which goods will be shipped.
For Canadian sellers: Be transparent about your shipping origin. If you ship from Canada, clearly disclose this and explain any applicable duty and VAT in your checkout flow. Sellers who pre-stock inventory in EU fulfillment warehouses avoid the 3 euro duty entirely because the goods are already inside the EU when the consumer orders.
If you sell online to EU consumers, take these steps before July 1, 2026:
Jet Worldwide supports Canadian e-commerce businesses with IOSS integration, H7 customs filing, and direct delivery solutions across all 27 EU member states. Contact our team to prepare for July 1, 2026.
VAT is charged on top of the 3 euro customs duty. Rates vary by member state. The standard rates for the most common Canadian export destinations are:
| Member State | Standard VAT Rate |
|---|---|
| Germany | 19% |
| France | 20% |
| Netherlands | 21% |
| Spain | 21% |
| Italy | 22% |
| Belgium | 21% |
| Ireland | 23% |
| Poland | 23% |
| Sweden | 25% |
| Hungary | 27% |
Note: Reduced VAT rates apply to certain product categories (books, food, children's clothing) in many member states. Confirm the applicable rate with your IOSS intermediary or customs broker.
Jet Worldwide
Canadian logistics provider for EU e-commerce, B2B shipping, IOSS integration, and CETA-qualified exports across all 27 member states.
EU destinations served: Germany, France, Netherlands, Spain, Italy, Belgium, Ireland, Poland, Sweden, Denmark, Austria, Portugal, Czech Republic, Finland, Romania, Hungary, Greece, and all remaining member states.
Last updated: May 28, 2026 | Reviewed by: Jet Worldwide Customs and Compliance Team | Content type: Regulatory update and editorial guide
Source: This article incorporates guidance from the Irish Revenue announcement of May 28, 2026 regarding new EU customs rules for e-commerce imports, as well as EU Regulation on customs reform for low-value consignments applicable across all 27 member states from July 1, 2026.
Disclaimer: Information in this article is provided for general guidance only and does not constitute legal, customs, or tax advice. Always confirm current regulations with your customs broker, IOSS intermediary, or the relevant EU member state customs authority before shipping.
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