The European Union has politically agreed on the most ambitious overhaul of its customs framework since the customs union was established in 1968. Across the Channel, the United Kingdom is pursuing its own, though earlier-stage, customs modernisation agenda, the first since its withdrawal from the EU. Together, these reforms will reshape how goods move across Europe’s borders.
This is the introductory briefing in our Customs Reform Unpacked series. In the Q&As below, we have gathered frequent questions about the EU and UK reforms and their objectives. Each answer provides a high-level overview; subsequent briefings in this series will take a deeper dive into the specific topics that matter most to your business.
Why reform, why now?
Q1. Why is the EU reforming its customs framework?
With the new Union Customs Code and implementing laws (together, the EU Customs Reform or the Reform), the EU legislator aims to address the operational weaknesses arising under the current law, which are primarily the result of changes in the way trade works (particularly when it comes to distance sales) and insufficient harmonisation between EU Member States. These include insufficient capacity to handle the surge in e-commerce volumes, fragmented IT systems and operations across the EU Member States, gaps in enforcing non-fiscal measures such as a widening range of product and environmental standards, and divergences in risk management and customs controls between entry points. The Reform was prioritised on the back of recent geopolitical developments, with customs regarded as a pivotal element in the enforcement of EU policy and the protection of the EU’s interests and competitiveness.
Q2. What are the three pillars of the EU Customs Reform?
The EU legislator has sculpted the Reform around three pillars. (1) A new EU Customs Authority will pool expertise and coordinate risk management, controls, and enforcement at EU level. (2) An EU Customs Data Hub (the Data Hub) will serve as a centralised digital platform for customs data submission, replacing the current customs declaration requirements and associated (national) systems, with the aim of streamlining and modernising the clearance process for economic operators while significantly increasing the risk identification and enforcement capabilities of customs authorities. (3) A modernised approach to e-commerce introduced customs duty liability on all e-commerce parcels from 1 July 2026, will lead to a handling fee payable from 1 November 2026, will lead to more data disclosure on e-commerce sales, and will make online marketplaces and sellers accountable for their sales into the EU. The e-commerce focus does not mean that only e-commerce players are affected by the Reform; it represents a complete overhaul of the current legislative framework, meaning that all businesses will be impacted.
Q3. When do the changes take effect?
There is no single go-live date. While the new Union Customs Code will enter into force the day after its official publication, which is expected in late September or early October 2026, most substantive provisions will only apply 12 months later, so around October 2027. The Data Hub will require several years of development and implementation; mandatory use is first envisaged from 1 July 2028, though the practical feasibility of that timeline will depend on the timely adoption of implementing acts and development of the Data Hub’s e-commerce functionalities.
Q4. What is the UK doing on customs reform, and how does it compare to the EU?
The UK is pursuing its own customs modernisation agenda, though this is at an earlier stage than the EU Customs Reform. The UK is planning to remove the customs duty relief for low-value imports, as the EU has already done. The new customs arrangements expected to take effect in October 2028. Under the proposed system, online sellers and marketplaces will be responsible for registering with HMRC, submitting item-level data, and paying customs duty quarterly based on the UK’s global tariff. Non-established sellers and marketplaces will need to appoint a fiscal representative who will be jointly and severally liable for the customs debt. A handling fee to cover administrative costs is also planned, mirroring the EU’s approach. Overall, the changes closely align in objective with the e-commerce elements of the EU Customs Reform.
Q5. Are the EU and UK reforms connected, or entirely separate initiatives?
Both reforms are legally and institutionally separate. The EU Customs Reform replaces the existing Union Customs Code, while the UK is developing its own customs architecture under domestic legislation, without formal alignment to the EU’s legal framework. The reforms are functionally connected, though: businesses operating in the EU and UK must navigate two distinct regimes that are evolving in parallel, and divergences will have practical compliance implications for cross-border operators.
What are the reforms trying to achieve?
Q6. What is the new EU Customs Authority, and what role will it play?
The EU Customs Authority will be a new EU body, headquartered in Lille, France. Its mission is to support national customs authorities in achieving uniform implementation of customs legislation across the EU, thereby addressing one of the main pain points of the current EU customs environment. It will carry out risk analysis, coordinate joint controls, conduct threat assessments, and provide operational support and capacity building, among other things. It will also play a crucial role in cooperation with the European Anti-Fraud Office (OLAF), Europol, Frontex, and market surveillance authorities.
Q7. What is the EU Customs Data Hub, and what will it achieve?
The EU Customs Data Hub is a centralised platform that will become the single point for submitting, processing, and exchanging customs data in the EU, regardless of the entry point. It will replace the current fragmented landscape of national IT systems developed under the existing Union Customs Code. The Data Hub will enable risk analysis, including through artificial intelligence, as well as interoperability with other EU and national IT systems. Businesses will need to submit more detailed data on their shipments, including details of the person responsible for product compliance as well as supporting documentation for the entry data. Enforcement authorities will have access to the data in the Data Hub, where customs penalties will also be recorded.
Q8. How will customs risk management and enforcement change?
The new Union Customs Code introduces a Union-level risk management layer. Risks will be analysed centrally by the EU Customs Authority, which will then issue control recommendations to Member States and will have the power to instruct that goods may not be loaded or transported. The Reform also structures cooperation with law enforcement, border management, and market surveillance authorities. We expect enforcement to be more structured than it is currently: the number of controls will increase, including controls on imported products’ compliance with EU laws more broadly, and findings of non-compliance will no longer be confined to the specific entry point. Through centralised recording of penalties in the Data Hub, structured information exchange, and streamlined enforcement coordinated by the EU Customs Authority, the Reform aims to end “border shopping” by economic operators seeking to import or export via more lenient Member States.
Q9. Why are the reforms focused on changes for e-commerce?
E-commerce is one of the primary drivers of the reforms in the EU and UK. The volume of low-value parcels entering the EU has grown exponentially in recent years; approximately 5.9 billion items entered the EU in 2025 alone. This places immense pressure on customs, which are not equipped to process goods at this scale. The customs duty relief, which has now been abolished, put businesses operating within the EU at a competitive disadvantage, and recent studies have shown that a significant proportion of the e-commerce products entering the EU did not comply with EU standards. The reforms aim to address this by abolishing the duty relief, shifting compliance responsibilities to marketplaces or online sellers, and introducing structured penalties for systematic non-compliance.
Q10. How will the EU Customs Reform strengthen product compliance enforcement?
Today, EU enforcement authorities, including customs, are struggling to obtain relevant data and identify the relevant persons to effectively enforce product compliance requirements. The EU Customs Reform addresses this in two ways. (1) It crystallises the liability framework by introducing an expanded importer and exporter concept: these persons will not only be liable for customs duty payment, but will also have to ensure that goods comply with other legislation applied by customs authorities. This includes standards on product safety, environmental protection, consumer protection, human and animal health, intellectual property, and sanctions and export controls. (2) The Reform strengthens enforcement through data: product compliance data will need to be disclosed as part of the entry or exit data by default, subject to strict time limits for submission, with streamlined data transfer and risk-based analysis by enforcement authorities permitted through the Data Hub, enabling enforcement at scale.
What changes for business?
Q11. How are the roles of importer, exporter, and declarant changing?
The EU Customs Reform redefines the roles of importer, exporter, and declarant. Once customs declarations are history and customs data is submitted or made available to the Data Hub, the role of the declarant, who is currently a crucial actor in the EU clearance process, will be phased out. Instead, the importer will be responsible for fiscal obligations (duty liability) and non-fiscal compliance (product and environmental standards, sanctions) at the border. The exporter will assume symmetrical responsibilities for outbound goods. Customs will have a direct legal basis for holding importers and exporters accountable for non-fiscal compliance. Businesses will need to assess establishment requirements and review their customs broker relationships to ensure compliance and identify opportunities for optimisation.
Q12. What is a Trust and Check Trader, and how does it differ from AEO status?
The Trust and Check Trader (TCT) is a new status that builds on the existing Authorised Economic Operator (AEO) scheme but goes further. Like AEOs, TCTs must demonstrate a clean compliance record, robust internal controls, financial solvency, and appropriate security standards. But TCTs must go further: they must grant customs access to their electronic systems, which provide near-real-time data on movement and compliance. In return, they may be able to self-release goods, move non-Union goods without completing transit formalities, defer duty payment, benefit from reduced guarantee requirements, and incur customs debt in their Member State of establishment. For certain activities, these statuses are not optional but indispensable. For instance, only TCTs may operate a customs warehouse for distance sales, and non-EU-established distance sale importers can only clear goods through an indirect representative holding AEO or TCT status. Businesses will need to review whether AEO/TCT status could help optimise operations; it remains to be seen whether these statuses will deliver on their promised benefits.
Q13. What new responsibilities will online platforms and e-commerce sellers face?
Persons supplying or facilitating distance sales will be regarded as the importer for those sales and will be responsible for customs duty liability and ensuring that the goods comply with all legislation applied by customs authorities. This means that online sellers and platforms, rather than customers, will bear responsibility for accurate data, duty payment, and product compliance. Parcellated imports will be subject to customs duty and a Union handling fee. The new Union Customs Code will introduce a dedicated penalty framework for systematic non-compliance in the context of distance sale imports, with hefty fines calculated as a percentage of the value of goods imported in the past 12 months, as well as the possibility of suspending an operator’s online interface.
Q14. Will there be a harmonised penalty framework for customs infringements?
While watered down from the original proposal, the new Union Customs Code introduces a minimum list of customs infringements at EU level and a framework for non-criminal penalties. Penalties can take the form of pecuniary charges, revocation or suspension of authorisations, confiscation, or warnings. All non-criminal penalties imposed by customs authorities must be recorded in the Data Hub, enabling centralised monitoring and reducing the risk of border shopping by economic operators seeking to import or export via more lenient Member States.
Q15. What should businesses be doing now to prepare?
Businesses should begin preparations now. Priority areas for action include strengthening internal trade compliance governance, including oversight of key stakeholders such as customs brokers; assessing the quality of customs data and capabilities for digital integration with the Data Hub; and reviewing the compliance of imported and exported products with EU product laws, since the EU Customs Reform in particular introduces new liabilities. Businesses with significant e-commerce flows into the EU should pay particular attention to the new importer obligations and the new EU penalty regime.
About the Reed Smith International Trade team
Reed Smith’s International Trade team is known for its deep experience in customs law, advising clients across the globe on the full spectrum of customs and international trade matters – from regulatory compliance, customs classification, origin, and valuation, to anti-dumping proceedings, sanctions, and export controls. Our team represents clients in customs litigation before courts and regulatory authorities worldwide and advises multinational businesses on complex cross-border trade projects in every major jurisdiction. If you have questions about how the reforms discussed in this briefing may affect your operations, please reach out to your usual Reed Smith contact or one of the team members below.
This briefing is based on publicly available EU and UK legislative proposals and official policy documents as at the date of publication. The legislative process has not yet been fully completed, and key operational details are still to be determined. Timelines, thresholds, and specific requirements discussed in this briefing may change as the legislative process advances. Readers should verify any information against the final legislative texts and official authority guidance before making compliance or business decisions.