EU Strengthens VAT Exemption for Small Non-Commercial Consignments 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 private individuals from non-EU countries. The decision reinforces a uniform interpretation of Directives 2006/112/EC and 2006/79/EC, ensuring that the exemption applies regardless of the Member State in which the recipient resides.

Legal background

Article 143(1)(b) of Directive 2006/112/EC exempts imports of goods covered by Directive 2006/79/EC from VAT. Article 1 of the latter Directive provides that small consignments of goods of a non-commercial character sent by one private individual in a third country to another private individual in a Member State qualify for tax relief.

However, some national authorities, including those in Poland, interpreted this exemption as applying only where the recipient lived in the same Member State in which the goods were imported. That excluded cases in which 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 preclude national rules that deny the VAT exemption for small, non-commercial consignments from a third country sent by a private individual to another private individual residing in a different Member State.

The Court based its decision on a literal, contextual and purposive interpretation of the provisions. It stressed that the EU legislature did not intend to make the VAT exemption conditional on a specific destination within the Union.

Practical implications

• Uniform VAT treatment: The judgment ensures that the exemption is applied consistently across all Member States, preventing divergent interpretations that could hinder private-to-private trade.

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

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

Conclusion

The CJEU judgment in Case C-405/24 reinforces the free movement of goods within the European Union and ensures that tax exemptions are applied consistently, without discrimination based on the recipient’s country of residence. It is a significant step towards tax harmonisation and the facilitation of private-to-private trade in the EU single market.