Summary

The European Union’s proposal for a flat €2 fee on billions of small packages represents a significant reform in the regulation of cross-border parcel delivery and customs processing within the EU. Aimed at addressing administrative complexities and ensuring fair competition in e-commerce, the proposal seeks to streamline customs duties and Value Added Tax (VAT) collection by shifting responsibility from consumers and carriers to e-commerce platforms at the point of sale. This measure is closely tied to recent and upcoming changes in customs duty exemptions, including the planned abolishment of the €150 threshold for customs duties on low-value consignments, and aligns with broader EU efforts to modernize customs and VAT frameworks amid growing international parcel volumes.
By introducing a uniform flat fee on small packages entering the EU, the proposal intends to simplify customs procedures, reduce hidden charges for consumers, and enhance transparency across cross-border transactions. It complements other initiatives such as the Import One-Stop Shop (IOSS) system and streamlined customs declarations for low-value goods, collectively aiming to improve efficiency and compliance within the internal market. The reform also forms part of the European Commission’s broader regulatory agenda, including sustainability reporting simplifications and administrative burden reductions for businesses, particularly small and medium-sized enterprises.
However, the flat fee proposal has sparked considerable controversy and opposition. While large network operators support the fee as necessary to fund infrastructure and address market imbalances, a wide coalition of academics, regulators, smaller internet service providers, consumer advocates, and civil society organizations argue that the fee risks unfairly burdening smaller market participants and consumers. Critics contend that the charge could stifle competition and innovation, potentially leading to increased costs for end-users without clear benefits, a concern amplified by the rejection of the “fair share” model in recent public consultations and parliamentary debates.
The proposal is situated within a complex legal and legislative framework, requiring adoption by the European Parliament and Council and reflecting the EU’s ongoing commitment to economic governance and regulatory simplification. As the Commission prepares to advance the measure alongside related customs reforms, its implementation timeline remains under scrutiny amid calls for balancing administrative efficiency with market fairness and consumer protection. International comparisons highlight the varied approaches to flat-rate fees on small parcels worldwide, underscoring the EU’s attempt to navigate regulatory, economic, and logistical challenges in a rapidly evolving global e-commerce landscape.

Background

The European Union has been actively addressing the challenges associated with cross-border parcel delivery and customs processes, especially in light of the increasing volume of small packages being shipped internationally. Traditionally, consumers and carriers have borne the responsibility of managing customs duties and associated fees, which has often led to unexpected charges and administrative burdens upon receipt of parcels from outside the EU. Since 1 July 2021, all goods imported into the EU, including France, are subject to Value Added Tax (VAT) from the first euro, with France applying a standard VAT rate of 20%.
In response to these issues, new regulatory measures have been proposed to simplify customs procedures and enhance transparency. Notably, a streamlined customs declaration process has been introduced for low-value duty-free goods and private-to-private consignments valued up to EUR 45, provided these shipments are not subject to prohibitions or restrictions. This simplified declaration requires only a minimal data set—approximately one-third of that needed for a standard customs declaration—thereby facilitating faster processing of the high volume of small parcels entering the EU.
Additionally, there is a growing focus on ensuring that platforms selling goods internationally take on greater responsibility for customs and VAT payments at the point of purchase. This shift aims to eliminate hidden charges and reduce the administrative load on consumers by ensuring fees are settled upfront. Moreover, individual EU member states, such as France, are considering introducing new measures like a “handling fee” on parcels worth less than €150, which currently are exempt from customs duties. This fee is expected to be implemented as early as 2026 to offset costs related to parcel processing.
Consumers facing issues with cross-border deliveries are encouraged to seek assistance from local European Consumer Centres, which provide advice and support for resolving such problems. Meanwhile, the European Commission continues to develop legislative initiatives and communication strategies to improve the overall framework for digital payments and customs handling within the EU, aiming for greater efficiency and consumer protection.

Proposal Overview

The European Commission is preparing to introduce a Simplification Omnibus proposal aimed at streamlining sustainability-related reporting and regulatory requirements across the EU. This initiative targets key legislative frameworks such as the EU Taxonomy, the Corporate Sustainability Reporting Directive, and the Corporate Sustainability Due Diligence Directive, with the overarching goal of achieving policy objectives in the simplest, most targeted, and least burdensome manner. The first Omnibus Simplification proposal is expected to be introduced imminently, with a significant focus on reducing the complexity and volume of sustainability reporting obligations.
Within the broader context of customs and postal regulations, the Commission is also proposing the introduction of a new flat fee, often referred to as the “Flat 2 Fee,” that would apply to billions of small packages entering the EU. This fee is connected to changes in customs duty exemptions, notably the planned abolishment of the EUR 150 customs duty exemption for low-value consignments—typically small e-commerce parcels sent from outside the EU to consumers. Although initially scheduled for implementation by March 2028, the enforcement of this abolishment may be accelerated due to recent policy developments.
The new flat fee proposal responds to practical challenges faced in cross-border parcel deliveries and aims to address administrative burdens related to customs processing. For example, current postal services impose dimensional weight calculations and fees to ensure accurate postage for packages with large volume but low actual weight, alongside penalties for non-compliance with dimension reporting. The Commission’s measures also align with ongoing reforms intended to synchronize VAT rules with customs regulations to improve overall efficiency and fairness in the EU internal market.

Objectives and Rationale

The European Union’s proposal for a flat fee on billions of small packages aims to streamline and simplify customs procedures while ensuring fair competition and transparency in cross-border e-commerce. One of the key objectives is to achieve policy goals in the most straightforward, targeted, and least burdensome manner, beginning with comprehensive simplifications in areas such as sustainable finance reporting, sustainability due diligence, and taxonomy. This approach seeks to reduce complexity and administrative costs for both businesses and consumers.
A significant rationale behind the flat fee system is to shift the responsibility of customs duties and VAT payment from individual consumers and carriers to the e-commerce platforms themselves. This change is intended to eliminate hidden charges and unexpected paperwork for consumers when their parcels arrive, thereby enhancing the overall purchasing experience and promoting trust in cross-border transactions. By doing so, the EU aims to create a level playing field for all businesses engaged in e-commerce, simplifying cross-border trade and increasing pricing transparency for EU buyers.
Furthermore, the proposal is aligned with the evolving legal framework on customs activities, recognizing the growing importance of e-commerce in global trade. The World Customs Organization (WCO) has underscored the need for effective customs controls that protect both societal interests and national fiscal systems. The EU’s initiative integrates new VAT rules, including the Import One-Stop Shop (IOSS), which facilitates simplified VAT declaration and payment for distance sales of goods imported from third countries with consignments not exceeding EUR 150. This modernization is expected to encourage compliance, reduce fraud, and improve the efficiency of customs operations.

Legal and Legislative Framework

The European Union’s proposal for a flat 2 fee on billions of small packages fits within a complex legal and legislative framework shaped by both existing treaties and ongoing regulatory reforms. Although the treaty ratification concerning similar fiscal measures did not require constitutional amendments in member states such as Luxembourg, it was advised that a two-thirds parliamentary majority be sought for legal certainty, given that some powers, particularly the validation of implementation laws, have shifted from national authorities to EU bodies like the Commission and the Court of Justice of the European Union. This precedent underscores the importance of robust parliamentary approval when introducing significant regulatory changes within the EU.
In December 2017, the European Commission proposed to embed the substance of the Fiscal Compact into EU law, resulting in the incorporation of its provisions into the economic governance framework through Regulations and Directives that came into force in April 2024. These legislative developments highlight the EU’s capacity to integrate complex fiscal and economic governance rules into binding legal instruments, providing a model for managing regulatory reforms such as the proposed flat fee on small packages.
The proposal must undergo consideration and adoption by both the European Parliament and the Council, following standard EU legislative procedures. The European Commission’s 2025 work programme has emphasized reducing administrative burdens by 25%, and by 35% for small and medium-sized enterprises by 2029, signaling a broader agenda to simplify EU rules and foster economic competitiveness. This strategic context suggests that the flat fee proposal will likely be designed to align with these simplification and efficiency goals.
Moreover, eligibility and applicability criteria in related EU funding and regulatory programs demonstrate that public authorities and bodies governed by public law across EU Member States and candidate countries must meet specific definitions as per Directive 2014/24/EU to participate in EU initiatives. This legal precision in defining stakeholders may influence the scope and enforcement mechanisms of the flat fee proposal.
In sum, the legal and legislative framework surrounding the EU’s flat 2 fee proposal is embedded within a broader EU commitment to deepen economic governance, ensure parliamentary oversight, and streamline administrative procedures while respecting the competences of both national and EU institutions.

Interaction with VAT and Customs Duties

The European Union’s proposal for a flat €2 fee on billions of small packages directly impacts the existing Value Added Tax (VAT) and customs duties framework applied to goods imported from non-EU countries. Traditionally, when consumers purchase goods from outside the EU, VAT is payable on all purchases regardless of the value of the goods, and customs duties apply to shipments exceeding €150, alongside excise duties for specific products. Goods may also be held by customs pending payment of these charges or if they are prohibited within the EU.
Under the current system, the responsibility for ensuring VAT and customs duties are paid largely falls on the individual consumer and carriers, often resulting in hidden charges and unexpected paperwork upon delivery. The EU’s proposal shifts this responsibility to e-commerce platforms, which would ensure that VAT and customs duties are collected at the point of sale, simplifying the process for consumers and reducing administrative burdens for postal and courier services.
Since 1 July 2021, the EU applies VAT from the very first euro on all goods imported from outside the Union, effectively eliminating the previous VAT exemption for low-value consignments. This change was part of a broader reform to modernize the VAT system, which had not been updated since 1993 despite the exponential growth of cross-border e-commerce. The reforms also include the introduction of the Import One Stop Shop (IOSS), which facilitates the declaration and payment of VAT for B2C sales of imported goods under €150, although the EU has proposed abolishing the €150 customs duty exemption altogether, potentially subjecting all B2C e-commerce imports to customs duties regardless of value.
For low-value consignments up to €45, which are duty-free and not subject to restrictions, streamlined procedures have been introduced to reduce administrative complexity and expedite processing, including a reduced set of required data elements for customs declarations. This harmonized approach supports both customs authorities and e-commerce stakeholders in managing high parcel volumes efficiently.
Additionally, some jurisdictions, such as the United States, have adopted alternative measures like flat per-shipment fees in place of traditional customs duties for low-value imports, reflecting a growing trend toward simplifying cross-border parcel handling through fixed charges.

Stakeholder Perspectives

The proposal for a flat €2 fee on billions of small packages shipped across the EU has elicited a wide range of reactions from various stakeholders, reflecting differing priorities and concerns.
Network operators, particularly the largest among them, have expressed support for the proposal, arguing that content providers are effectively “free riding” on their infrastructure. They view the fee as a necessary measure to address what they perceive as a market failure and to secure funding for the expansion and improvement of network infrastructure. This position, however, has been met with broad opposition across academia, regulators, small and medium-sized Internet Service Providers (ISPs), Internet Exchange Points (IXPs), civil society organizations, consumer advocates, and content providers themselves, who largely see the proposal as potentially damaging to the ecosystem and unfairly targeting smaller market participants.
Consumer advocates have raised concerns about the impact on end-users, particularly highlighting the risk of additional costs being passed down to consumers without clear benefits. This sentiment is reinforced by initiatives aiming to protect consumers from hidden charges and unexpected paperwork when receiving parcels, as the new customs system places the responsibility for customs duties and VAT on platforms at the point of purchase rather than on consumers or carriers.
From the business perspective, some experts emphasize the importance of flexibility in pricing systems, suggesting that no rigid structures are needed and that companies should be able to tailor their pricing strategies to align with their objectives, efforts, and costs. This approach advocates for management-driven pricing adjustments rather than externally imposed flat fees.
Policy-makers and regulatory bodies, meanwhile, have engaged in consultations to gauge the implications of the proposal. The European Commission, for example, conducted a public consultation concluding in October 2023 to better understand stakeholder positions and to explore potential pathways forward.

Potential Impacts

The proposed flat fee on billions of small packages in the EU is expected to have wide-ranging administrative, financial, and market effects. One of the primary anticipated benefits is a significant reduction in administrative costs related to sustainability reporting and compliance. For instance, changes to the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) could yield annual savings of approximately €4.4 billion, with immediate one-off relief estimated at €1.6 billion for exempted firms and €0.9 billion related to taxonomy requirements.
However, the proposal may also introduce new financial burdens, particularly affecting smaller players in the e-commerce and communications sectors. Large internet service providers (ISPs) might gain a competitive advantage due to their greater capacity to absorb increased costs, potentially undermining fair competition. Such charges could conflict with network neutrality principles and lead to increased connectivity expenses for average European internet users. Similarly, recent changes in postal fees, such as the U.S. Administration’s 2025 adjustments raising fees on postal shipments from China, demonstrate how increased costs for small parcels can impact e-commerce sellers and drop-shippers reliant on cross-border fulfillment.
From a consumer perspective, the flat fee system aims to simplify cross-border transactions by increasing transparency and ensuring customs duties and VAT are settled at the point of purchase. This shift could eliminate hidden charges and unexpected paperwork upon delivery, thus enhancing buyer experience and trust in EU e-commerce markets. The European Commission’s efforts to level the playing field and simplify cross-border trade may also protect households and businesses from excessive financial burdens, particularly in the context of broader economic challenges such as energy price volatility.

Implementation Timeline and Process

The implementation of the proposed EU reforms, including the introduction of a flat €2 fee on billions of small packages, follows a carefully staged timeline designed to balance swift action with the necessary legislative scrutiny. In the short term (0–18 months), the European Commission focuses on proposals that fall within the existing competences of EU treaties, ensuring quicker adoption without requiring treaty amendments. More comprehensive measures, such as the issuance of eurobills with a 1-year maturity, are targeted for the medium term (18 months to 5 years), while long-term initiatives like eurobonds with a 10-year maturity are planned for beyond five years.
The European Commission is set to present its first Simplification Omnibus proposal imminently, aimed at reducing administrative burdens by targeting areas such as sustainable finance reporting, sustainability due diligence, and taxonomy. This package is part of a broader agenda to simplify and streamline regulations affecting EU companies, with an overall goal of reducing administrative burdens by 25%, and by 35% specifically for small and medium-sized enterprises by the end of the Commission’s mandate in 2029.
Following the proposal phase, the legislative package will be submitted to the European Parliament and the Council for their consideration and adoption, allowing time for co-legislators to agree on substantive changes. Additionally, reforms related to customs exemptions and VAT synchronization are planned to be implemented potentially earlier than initially scheduled, reflecting the Commission’s intent to accelerate parts of the package in line with evolving policy priorities.
The EU Customs Reform package underpinning these changes benefits from preparatory work including impact assessments, public consultations, and recommendations from the

Criticisms and Controversies

The proposed flat €2 fee on billions of small packages has faced broad opposition from a wide range of stakeholders. Academia, regulators, small and medium-sized Internet Service Providers (ISPs), Internet Exchange Points (IXPs), civil society organizations, consumer advocates, and content providers have all expressed concerns about the potential negative impacts of the fee. The only group largely supporting the proposal appears to be the largest network operators, creating a significant divide within the sector.
Public consultation results, published in October 2023, revealed clear rejection of the so-called ‘fair share’ model by a majority of respondents. This opposition is echoed within the European Parliament, where most members have also voiced their disapproval of the proposal. The controversy has sparked ongoing speculation among business interests and climate activists alike, with experts frequently offering varied interpretations of what the final bill might entail, though no definitive proposal has yet been presented.
The dispute revolves not only around the fee’s economic implications but also its broader effects on market dynamics and digital infrastructure. Critics argue that imposing a uniform charge on small packages could disproportionately impact smaller operators and consumers, potentially hindering competition and innovation within the European e-commerce and telecommunications sectors. Despite these concerns, proponents suggest the fee could simplify tariff structures and aid regulatory compliance, though this remains a contentious point.

International Comparisons

The concept of flat-rate shipping fees for small parcels is implemented differently across various regions and countries, reflecting diverse regulatory and economic considerations. In the United States, for example, the Postal Service offers a Flat Rate option allowing customers to ship using free Flat Rate Boxes and Envelopes with prices starting at $30.90 for smaller packages and varying by weight and destination for larger parcels up to 70 lbs, starting at $42.95. Packages destined for countries adhering to European Union customs rules require more detailed content descriptions on customs forms, highlighting the complexity involved in cross-border shipping.
In Europe, some countries apply parking rates and reduced VAT rates on certain goods and services, with reduced VAT rates set at a minimum of 12%. These adaptations aim to balance revenue collection with market competitiveness and consumer protection. The European Union also enforces specific tariff rates, such as an additional ad valorem duty rate of 20% on articles produced in Jordan or EU member states. However, upcoming changes in U.S. policy, particularly the April 8, 2025 Executive Order, will significantly affect import fees on low-value parcels. Postal shipments from China will face fee increases from $25 to $75 per item starting May 2, 2025, and further rising to $150 per item from June 1, 2025. Furthermore, duty rates on targeted goods linked to synthetic opioid supply chains will increase from 30% to 90%, causing substantial cost impacts for e-commerce sellers and drop-shippers reliant on small-parcel fulfillment from China.
Globally, the World Customs Organization (WCO) recognizes the growing importance of cross-border e-commerce and its regulatory challenges. The WCO has prioritized mechanisms to ensure that customs controls effectively protect both societal interests and the fiscal systems of individual countries, emphasizing the need for adaptable policies in the evolving international trade landscape.
Beyond customs fees, various road user charges illustrate alternative flat-rate approaches in transportation. In some European countries such as Switzerland, Austria, the Czech Republic, and Slovenia, motorway tolls are managed through the purchase of time-based vignettes (weekly, monthly, or annual stickers) rather than distance-based fees. Historically, the flat rate concept extended even into passenger air traffic, exemplified by American Airlines’ AAirpass, which offered a fixed price for unlimited flights over a set period.
These international comparisons demonstrate the complexity and variability of flat-rate fee structures in small-package shipping, reflecting a balance between regulatory frameworks, market needs, and logistical realities.