EU Fulfilment for UK Brands After Brexit: Ship from the UK or Hold Stock in the EU?

UK brands selling to EU customers have two main routes. Either ship each order from the UK with duty and VAT paid up front, known as DDP, or move stock into an EU warehouse and deliver from there. Shipping from the UK is simpler and suits lower volumes. An EU warehouse gives faster delivery and easier returns, and it brings EU VAT registration and import paperwork with it.

The rules changed on 1 July 2026, when the EU started charging a flat customs duty on low-value parcels. If you priced your EU route before then, run the numbers again.

The pain points

• EU customers refuse parcels when the courier asks them for VAT and a fee at the door.

• Delivery to France takes a week, and our reviews say so.

• Returns from Germany cost more than the order was worth.

• We were told UK goods are duty free in the EU, then a duty bill arrived.

• We can't tell whether we need to register for VAT in an EU country.

Shipping from the UK: IOSS and the €150 limit

For orders worth €150 or less, the EU's Import One Stop Shop (IOSS) lets you charge EU VAT at checkout at the customer's local rate and pay it through one monthly return. The customer pays nothing on delivery, so fewer parcels are refused. Businesses based in Great Britain need an intermediary to register; HMRC explains who can register for the IOSS scheme. Orders above €150 fall outside IOSS, so import VAT and duty are due at the EU border, paid by your courier on your behalf or by the customer on delivery.

From 1 July 2026, the EU charges a temporary customs duty of €3 per item on parcels worth €150 or less sold to consumers. An item means goods sharing the same tariff classification: five identical T-shirts pay €3, and a T-shirt plus a watch pay €6. The duty applies whichever VAT route you use and runs until 1 July 2028, when the EU Customs Data Hub is due to launch. See the Commission's guidance on the €3 duty.

There is a catch for UK goods. The guidance excludes goods with a trade agreement preference only when VAT was not collected through IOSS and the goods go on a full standard declaration. UK-origin goods sent under IOSS can therefore pick up the €3 charge. Check this with your customs broker.

An EU handling fee for low-value parcels is also coming. The Commission adopted a delegated act in September 2026 setting it at €2, subject to an objection period, with a start expected in late 2026. Some EU countries add their own fees. Check the current position with the European Commission.

Rules of origin: when UK goods are duty free

The EU-UK Trade and Cooperation Agreement gives 0% duty only to goods that meet its rules of origin, and only when the importer claims the preference. The claim is usually a statement on origin on the commercial invoice, or the importer's own knowledge backed by records. Goods made outside the UK, such as products bought from a factory in China and resold as they are, are not UK origin. They pay the EU's normal duty rate when they enter the EU. Repacking or labelling them in the UK does not change their origin.

Holding stock in an EU warehouse: VAT, EORI and import

An EU warehouse turns thousands of small parcels into a few bulk imports. Each one needs a full customs declaration and an EU EORI number, which you get from the EU country where you first lodge a declaration. You pay or account for import VAT and any duty on the shipment. The €3 duty covers parcels sold to consumers, so it does not apply to these bulk imports.

Holding stock in an EU country means registering for VAT there. Sales from that stock to customers in other EU countries are usually reported through the EU's One Stop Shop (OSS). The €10,000 distance selling threshold is only for businesses established in the EU, so a UK brand charges the customer's local VAT from the first sale. Some EU countries also require a fiscal representative. Take advice from an EU VAT adviser before the first shipment.

Product safety duties apply too; see our guide to GPSR for UK sellers.

Returns from EU customers

When you ship from the UK, every return crosses a border. Goods coming back into the UK may qualify for Returned Goods Relief if they were exported from the UK and come back unaltered within three years, with export evidence. If you collected VAT through IOSS, you adjust the IOSS return when you refund the customer. Some brands consolidate EU returns inside the EU and bring them back in bulk.

With an EU warehouse, returns go back into local stock and can be resold quickly. For fashion and other high-return categories, this often decides it. Our guide to returns policy costs shows how to price it.

When an EU 3PL makes sense

• Order volume: bulk imports, VAT registration and accounting cost less than duty, fees and cross-border postage on every parcel.

• Delivery times: a domestic EU parcel usually arrives faster than a cross-border one from the UK.

• Returns: your return rate is high, and sending returns back to the UK eats the margin.

• Basket shape: baskets hold several different products, so the €3 per item charge adds up.

• Demand: most EU orders come from one or two countries, so one warehouse covers them well.

Our recommendation: price both routes on your real EU orders

1. Export six months of EU orders with country, basket value, number of different products and returns.

2. Confirm the origin and commodity code of each product with your suppliers.

3. Price the UK route: postage, IOSS intermediary fees, the €3 duty per item, any handling fee and the cost of returns. Our guide to the landed cost of a 3PL quote shows which lines to include.

4. Price the EU route: bulk freight, import VAT cash flow, duty on non-UK goods, VAT registration and filings, EU 3PL fees and local postage.

5. Compare cost per order now and at your 12-month forecast.

6. If EU stock wins, start with one warehouse in the country with the most orders, and review after one quarter.

For the wider checklist, see our guide to choosing a 3PL in the UK.

What waiting costs

The €3 duty has applied since 1 July 2026, so every month on an old price list costs margin. The handling fee is expected to add to that later in 2026, and in July 2028 the EU plans to move low-value parcels onto normal duty rates.

These figures are made up to show the method. A brand ships 1,500 EU orders a month, each holding two different products. Under the €3 rule that is €9,000 a month in duty, or €108,000 a year, before any handling fee. An EU warehouse takes months to set up, so start the comparison now.

People Also Ask

Do UK brands need an EU warehouse to sell to the EU?

No. Many UK brands ship from the UK using IOSS for orders up to €150. An EU warehouse makes sense once volume, delivery times or returns costs justify the VAT registration and import paperwork.

Do I need an EU EORI number?

You need one if your business lodges customs declarations in the EU, such as when you import stock into an EU warehouse. You apply in the EU country where you first lodge a declaration.

Is there duty on UK goods sold to EU customers?

Goods that meet the rules of origin can enter at 0% duty when the preference is claimed. Goods made outside the UK pay normal EU duty. Since 1 July 2026, parcels worth €150 or less can also face a €3 duty per item, including UK goods sent under IOSS.

Finding the right EU fulfilment partner

Logan, FulfilQ's advisor on the website, matches brands to verified providers by order volume, product type and region. Tell Logan what you ship and which EU countries your orders come from, and you get a shortlist to ask about EU warehousing, customs clearance and cross-border returns. Start at fulfilq.com and Ask Logan, or Submit an RFP and verified providers come back to you. You can also browse the full provider directory.