EU Court Strengthens VAT Exemption for Small Non-Commercial Shipments Between Individuals

On 8 May 2025, the Court of Justice of the European Union (CJEU) delivered a landmark judgment in Case C-405/24 clarifying how the VAT exemption applies to small, non-commercial consignments sent between individuals from non-EU countries. The decision reinforces the uniform interpretation of Directives 2006/112/EC and 2006/79/EC, confirming that the exemption applies regardless of the Member State where the recipient lives.

Legal context

Article 143(1)(b) of Directive 2006/112/EC provides for a VAT exemption on imports of goods covered by Directive 2006/79/EC. Article 1 of the latter Directive provides that small consignments of a non-commercial nature sent by one individual in a non-EU country to another individual in a Member State are eligible for duty relief.

However, some national authorities, including those in Poland, interpreted the exemption as applying only where the recipient lived in the same Member State in which the import took place. They therefore excluded cases where the recipient lived in another Member State.

The CJEU judgment

The CJEU held that Article 143(1)(b) of Directive 2006/112/EC and Article 1 of Directive 2006/79/EC must be interpreted as precluding national rules that deny the VAT exemption for small, non-commercial consignments sent by an individual from a non-EU country to an individual resident in a different Member State.

The Court based its decision on a literal, contextual and purposive interpretation of the provisions. It emphasised that the EU legislature did not intend to make the VAT exemption conditional on the recipient being located in a particular place within the Union.

Practical implications

Uniform application of VAT: The judgment ensures that the exemption is applied consistently across all Member States, preventing divergent interpretations that could hinder trade between individuals.

Easier exchanges between individuals: It simplifies procedures for individuals sending small, non-commercial parcels to other individuals in different Member States, removing unnecessary tax barriers.

Legal clarity: The decision clarifies how the relevant directives should be interpreted, which is important for customs authorities and individuals involved in these transactions.

Conclusion

The CJEU’s judgment in Case C-405/24 reinforces the principle of the free movement of goods within the European Union by ensuring that tax exemptions are applied consistently and without discrimination based on the recipient’s place of residence.

It is a significant step towards tax harmonisation and facilitating trade between individuals in the European single market.