EU Customs Union and Tax Cooperation

The customs union is an exclusive Union competence under Article 3(1)(a) TFEU. Articles 28–33 prohibit customs duties and equivalent charges between Member States and establish a common customs tariff towards third countries. Customs law supplies procedures, valuation, origin, classification, supervision and debt rules.

Taxation remains mainly national. Article 113 TFEU permits harmonisation of indirect taxes needed for the internal market and avoidance of distortions. Article 115 supports selected direct-tax approximation where national laws directly affect the internal market.

Both routes normally require unanimous Council action after consultation of Parliament and the European Economic and Social Committee. Parliament gives an opinion, not an ordinary-procedure co-decision. Tax policy does not generally use qualified majority voting.

Regulation (EU) No 952/2013, the current Union Customs Code, provides the central rulebook. The Combined Nomenclature classifies goods; the Common Customs Tariff links classification to duties and trade measures. Value and origin also affect treatment. Preferential origin may unlock reduced or zero duty under an agreement or autonomous scheme when its conditions are proved.

National customs administrations collect duties, analyse risk and enforce fiscal and non-fiscal rules, including product safety, sanctions and environmental restrictions. The Commission guards uniform application and runs common systems; it does not replace national customs officers.

Union goods generally circulate without internal customs formalities. Release for free circulation gives non-Union goods Union status after import requirements are met. Transit, warehousing, inward processing and temporary admission suspend or alter charges under defined conditions.

VAT is a consumption tax collected through the supply chain and borne by the final consumer. Directive 2006/112/EC harmonises transactions, place-of-supply rules, deductions, exemptions, invoicing and rates. Member States administer it. Standard rates must be at least 15%; national rates still differ.

Place-of-supply rules allocate taxing rights. The One Stop Shop centralises declarations for certain cross-border consumer supplies; the Import One Stop Shop covers qualifying low-value distance sales. The VAT-based EU own resource is not national VAT revenue.

Excise duties target alcohol, tobacco and energy. EU law sets common arrangements and minimum rates; Member States set national rates. Commercial taxation generally follows consumption. The Excise Movement and Control System tracks duty-suspended goods. Revenue goes to Member States.

Personal and corporate direct taxes remain national, subject to Treaty freedoms, state-aid rules and targeted EU legislation. Directives address cross-border payments, mergers, anti-tax avoidance, minimum effective corporate taxation and administrative cooperation. The Court of Justice can find that a national tax rule unjustifiably restricts free movement even without harmonising legislation.

The Directive on Administrative Cooperation, or DAC, enables tax-information exchange. Amendments cover accounts, rulings, country-by-country reports, reportable arrangements, platforms and crypto-assets. DAC9, adopted in April 2025, standardises top-up-tax information under EU minimum-tax rules. Directives still require transposition.

FASTER, adopted in December 2024, creates a digital tax residence certificate and faster withholding-tax relief. Member States must transpose by 31 December 2028 and apply rules from 1 January 2030. It is adopted but not yet operationally applicable.

ViDA was adopted on 11 March 2025 and entered into force on 14 April. Roll-out continues through 2035. Member States can introduce mandatory e-invoicing under specified conditions; Import One Stop Shop controls were strengthened.

Platform deemed-supplier and single-registration rules start from July 2028. Cross-border business-to-business digital reporting applies from July 2030. Domestic real-time reporting systems must align with the EU model by January 2035.

The Commission proposed a new Union Customs Code in May 2023. Parliament and Council reached provisional political agreement on 26 March 2026. The agreed architecture would create an EU Customs Authority in Lille, an EU Customs Data Hub and Trust and Check status for transparent traders. National administrations would retain frontline controls.

The political agreement plans Data Hub opening for e-commerce on 1 July 2028 and phased expansion to all goods movements by 1 March 2034. A political deal is not final signature, Official Journal publication or application. As of 17 August 2026, official progress reporting still calls the March result a political agreement. Regulation 952/2013 therefore remains the applicable code until formal adoption and entry into force are confirmed.

Regulation (EU) 2026/382 already applies a temporary €3 customs duty to low-value consignments up to €150 from 1 July 2026. It is calculated by tariff category, not each physical unit. This duty is distinct from a handling fee envisaged by the broader reform.