Germany is backing a sweeping overhaul of EU import taxes that could end duty-free access for cheap packages. Earlier, online retailers Shein and Temu grabbed market share with low-priced clothing, accessories and gadgets made in China.
Under current EU rules, packages bought online from non-EU countries are not subject to tariffs if their value is less than 150 euros (about $163).
Some in the United States have long complained that Shein and Temu use duty-free imports to undercut competitors and avoid customs inspections of their products. The practice has allowed the two companies to offer shoppers around the world dresses for as little as $8 and smartwatches for as little as $25. Shein stepped up preparations for a London listing after its attempt to list in New York was blocked by US lawmakers.
Germany's main retail association, HDE, has been lobbying the German government, arguing that the exemption has encouraged a huge increase in the number of small packages entering the EU from online platforms such as Shein and Temu, while customs authorities lack the ability to check that all products comply with EU rules.
HDE indicates that German Finance Minister Christian Lindner "has indicated that Germany would support the removal of the 150 euro tax-free limit at the European level." The German finance ministry said it welcomed the European Commission's "proposal to adapt European customs law to the challenges of e-commerce," referring to a broader reform plan that includes an end to duty-free restrictions.
Shein said: "We seek to comply with all relevant local laws and regulations in the countries where we operate, including those relating to customs and tax compliance." As part of the tariff reform project proposed by the European Commission in May 2023, the EU is discussing the removal of this restriction.
Asked if the EU might lift the restriction, Shein said: "Contrary to some common misconceptions, we keep prices affordable through a technology-based on-demand business model and a flexible supply chain."
Europe's e-commerce industry association, whose members include Amazon and eBay, said lifting the tax-free restrictions would increase trade friction and could lead to retaliatory measures from major trading partners such as the United States. The European Parliament approved the tariff reform bill in a preliminary vote in March, but the bill will be further evaluated after the European Parliament elections in early June, when the new parliament will be in place.
According to the European Commission, in 2023, 2 billion packages with a declared value of less than 150 euros arrived in the EU from countries outside the bloc. The commission said that "the sheer volume of e-commerce is testing the limits of customs". The Commission also said the import duty exemption encouraged sellers to split their goods, with up to 65 percent of packages undervalued to benefit from the tax break.
Shein said the company made the relevant declarations on orders shipped to European customers and paid the required taxes, including related duties on orders worth more than 150 euros. Temu, meanwhile, said they do not split packages to bypass customs controls or make false declarations.
