The European e-commerce market is facing a major change. Following the EU's announcement to charge cross-border small parcels starting in 2026, Germany has decided to take action early. According to the latest notice from the German Federal Ministry of Finance, starting from 00:00 on November 24, 2025, all cross-border e-commerce parcels from China, regardless of value, will be subject to a uniform 23% Value Added Tax (VAT). The previous exemption for parcels under €22 will also be canceled.

Why Germany is Taking Action

The German government stated that the new policy aims to curb the influx of low-quality Chinese goods and protect domestic manufacturing competitiveness. The Finance Minister emphasized that duty-free small parcels have caused unfair competition in the domestic market, and the new regulation will help restore a fair trading environment.

About 70% of international parcels entering Europe in 2024 come from China, totaling over 4.6 billion items. Germany alone loses over USD 10 billion annually in VAT revenue due to duty-free parcels. The German Retail Association reported that local stores in apparel and home goods have lost more than €800 million in revenue due to low-priced Chinese products. The association strongly supports the new tax policy.

Impact on Sellers

1. Increased Profit Pressure

The 23% VAT will directly reduce profit margins, especially for small and medium-sized sellers relying on low pricing strategies. Passing the tax onto consumers may also affect conversion rates.

2. Higher Compliance Costs

Sellers will need to register for a German VAT number or use the EU's One Stop Shop (OSS) system. Complex situations may require professional tax advisors, increasing operational costs.

3. Potential Delays in Customs Clearance

Based on similar policies in the US, German customs may experience delays due to a surge in parcel declarations. During peak sales seasons like Black Friday and Christmas, this could affect delivery times and customer satisfaction.

Shipping Costs May Rise

Some EU-based logistics providers have already issued warnings that shipping prices to Germany may increase following the new VAT regulation. Exact changes are still being evaluated, and updates will be provided for different product lines.

Conclusion

For cross-border sellers, this sudden policy change will affect profit margins, operational compliance, and shipping costs. Sellers should register for German VAT, adjust pricing strategies, and communicate with logistics partners in advance to ensure smooth operations during peak sales periods.