If you ship to UK and EU customers from China, tax is now part of every order. The UK requires VAT to be charged at checkout on most low-value consignments, the EU collects import VAT through the Import One-Stop Shop (IOSS), and from 1 July 2026 the EU also applies customs duty to parcels that used to enter duty free. None of this makes Europe a bad market. It just means your fulfillment set-up has to handle tax correctly, or your customers will be asked to pay on the doorstep.
This guide explains the current rules in plain terms and how to structure fulfillment from a China warehouse around them. It is general information, not tax advice, so confirm your own registrations with a VAT adviser.
The UK: VAT at the point of sale for goods of £135 or less
Since Brexit, the UK treats low-value imports differently from the EU. According to UK government guidance, overseas sellers selling consignments of £135 or less directly to UK consumers must charge and account for VAT at the point of sale, which means registering for UK VAT. Business-to-business sales can use a reverse charge if the buyer provides a UK VAT number, and different rules apply when you sell through online marketplaces, which generally collect the VAT themselves.
Above £135, import VAT and any duty are normally collected at the border. That is where a DDP shipping line matters, because it pays those charges before delivery instead of passing them to your customer.
The EU: IOSS for import VAT
For goods worth up to €150, non-EU sellers can register for IOSS, usually through an EU-based intermediary, collect VAT at checkout at the customer’s local rate, and file one monthly return. Parcels shipped under a valid IOSS number clear customs without the customer paying VAT on arrival. Without IOSS, import VAT and a carrier handling fee are typically charged to the customer on delivery, which is a common cause of refused parcels.
What changed on 1 July 2026: EU duty on low-value parcels
The EU has abolished its €150 customs duty exemption. As PwC explains, from 1 July 2026 an interim flat duty of €3 applies per item category in a parcel, decided by commodity code. A parcel with a blouse and a pair of trousers counts as two categories and owes €6. A handling fee is expected later in 2026, and standard customs duty rates are due to apply from 1 July 2028.
Two practical effects for China-based sellers:
- Mixed-category orders cost more. Bundles that combine product types now carry more duty than single-category orders.
- Product data must be accurate. Correct commodity codes on every SKU decide how many categories, and how much duty, each parcel carries.
Quick reference: UK and EU rules side by side
| UK | EU | |
|---|---|---|
| Low-value threshold | £135 | €150 |
| VAT on low-value goods | Charged by seller at checkout (UK VAT registration) | Collected at checkout via IOSS, or from customer on arrival |
| Duty on low-value goods | Check current UK rules for your products | €3 per item category from 1 July 2026 (interim) |
| Marketplace sales | Marketplace usually accounts for VAT | Marketplace usually collects VAT and duty |
How to set up fulfillment from China for UK and EU orders
- Register where needed: UK VAT for direct UK sales, IOSS for EU sales up to €150.
- Collect tax at checkout: configure your store to show VAT-inclusive prices for UK and EU customers.
- Classify every SKU: give your warehouse accurate commodity codes, product descriptions and values.
- Use DDP lines: ship with carriers that pass your IOSS or VAT details to customs and settle duty before delivery.
- Review bundles: check how many duty categories each common order contains and price accordingly.
If you are unsure how DDP and DDU differ in practice, our guide to DDP vs DDU shipping walks through who pays what at each stage.
How Fulfillmen ships to the UK and Europe
Fulfillmen stores inventory in China, Hong Kong and India and ships worldwide through DHL, FedEx, UPS and our own dedicated lines, including DDP options so duties are settled before delivery. Orders sync from Shopify, WooCommerce and Amazon through a free API, and there is no minimum order quantity or monthly commitment. Learn more about our international logistics services.
Frequently asked questions
Do I need to register for VAT to sell to UK customers from China?
For direct sales of consignments of £135 or less to UK consumers, overseas sellers generally need UK VAT registration to charge VAT at checkout. Marketplace sales follow different rules.
Is IOSS mandatory for selling to the EU?
No, but without it your customers usually pay import VAT and a handling fee on delivery, which increases refused parcels and complaints.
How much duty is charged on small parcels to the EU now?
From 1 July 2026, an interim flat duty of €3 applies per item category in a parcel, with standard rates due from 1 July 2028.
Can I avoid my customers paying anything on delivery?
Yes. Collect VAT at checkout through UK VAT registration or IOSS, and ship on a DDP line that settles duty before delivery.
Expanding into the UK or Europe? Send us your product list and target countries for a DDP shipping quote. Get a free quote.
