International returns in 2026: why cross-border reverse logistics got harder and what to do about it

Why returns from the EU got harder in 2026

Under rules approved by the Council of the EU, an interim €3 customs duty has applied since 1 July 2026 to each item category in a low-value consignment, identified by its tariff subheading. It replaces the former €150 duty exemption and runs until 1 July 2028, when the permanent system takes over. A separate EU-wide handling fee is expected from November 2026, although its amount was still to be confirmed at the time of writing.

The July reforms did not create a new customs border for the return journey into Great Britain – eCommerce returns from the EU have needed full customs treatment since Brexit. What changed is the economics of the original sale: duty paid on the outbound shipment is not automatically recovered when an item comes back, while a replacement shipment may lead to a new charge. GFS’ guide to the 2026 EU customs reform covers the outbound changes in detail; this piece covers the reverse leg.

The Republic of Ireland shows the problem clearly. It is the closest EU market for most UK retailers, but every consumer return from the Republic crosses a full customs border. Returns sent back like domestic post pick up avoidable duty, delay and failed declaration costs.

The reverse leg is also a data exercise. A consumer return from the EU is an export from the EU and an import into Great Britain, so commodity codes, values and proof of the original export need to travel with the parcel. Retailers shipping into Europe through structured international eCommerce services can reuse the outbound customs data to pre-populate the return declaration, which is where most of the admin saving sits.

Returned Goods Relief – how UK retailers use it

Returned Goods Relief (RGR) is the mechanism that stops UK retailers from paying import duty and VAT twice on their own stock. HMRC allows eligible goods exported from the UK to be re-imported without duty or import VAT. The core operational conditions are:

• Timing: the goods must return within three years of the original export
• Condition: the goods must be returned in an unaltered state, apart from work required to maintain or restore them to working order, provided that work has not increased their value
• Evidence: proof of the original export is needed, normally the export declaration, and the relief must be claimed at the point of re-import

For VAT relief, the re-import must be made by the original exporter, which is why returns need to flow back through the retailer’s own customs identity rather than an unrelated third party. Relief is also available on partial returns: if only part of an order is returned, the relief still applies.

The difficulty is operational rather than legal. In practice, the evidence is the export declaration reference from the original shipment. Retailers that capture it at despatch and carry it through the returns process can claim relief at re-import as a routine step, while those reconstructing the evidence after the event may face additional administration, delays or a lost claim.

RGR is only as good as the data attached to the parcel. Once the link to the original export declaration is lost, there is no relief left to claim.

The hidden cost of a cross-border return – carrier, customs and VAT recovery

The refund is the visible cost of a return. The rest of the bill sits underneath it:

• Return carriage: international collection and drop-off rates run well above domestic their domestic equivalents
• Customs and brokerage: every return needs a declaration, and declaration errors mean holds, storage fees or parcels abandoned at the border
• Potentially unrecovered duty: EU import duty is not automatically refunded when an order is returned. Repayment may be available in defined circumstances, including goods rejected because they were defective or did not comply with the contract
• VAT adjustment: refunds on IOSS orders need correcting in the next IOSS return, and mistakes compound month on month
• Time to restock: a domestic return is back on sale in days, while a cross-border return can take weeks. In clothing, for example, 23.6% of orders come back, according to ZigZag and Retail Economics. Every day those items sit in the returns process instead of being back on sale is lost revenue.

Each cost looks small on its own, but across thousands of returns a year, they decide whether an EU market is profitable at all.

Returns portals, IOSS and reverse declarations

Most of the friction in international reverse logistics starts with data rather than transport. Three pieces of infrastructure do the heavy lifting:

• A branded returns portal: captures the return reason, validates eligibility and generates the right customs paperwork before the parcel moves
• IOSS alignment: where the outbound order was declared under the Import One-Stop Shop, the refund needs to be reflected in the corresponding IOSS return so VAT is not overpaid
• Reverse declarations: pre-populated from the outbound shipment data, so commodity codes, values and export references match on both legs

The matching in the reverse declaration matters more than it sounds. Values, commodity codes and references on the return declaration need to reconcile with the outbound record. Mismatches are a common trigger for border holds and rejected relief claims.

Consolidation is the other lever. Aggregating returns in-market and moving them back to the UK in bulk cuts per-parcel carriage and reduces the number of declarations, which is why EU returns hubs have become standard practice for high-volume retailers.

Where a managed multi-carrier partner removes complexity

None of this needs to be built in-house. GFS is a managed multi-carrier delivery partner, sitting between the retailer and the carrier network to provide the carrier management, technology, operational expertise and commercial leverage that cross-border returns now demand.

Through GFS Global Returns Pro, customers get access to 320,000+ return drop-off locations worldwide and local-language portals in 35+ languages. The platform also supports electronic customs declarations for duty relief, reducing the manual customs work attached to cross-border returns. And because returns run through the same returns management service that handles domestic volume, international returns stop being a separate, manual workstream.

Carrier choice matters just as much on the way back. GFS’ managed multi-carrier delivery model means each return travels on the carrier and service that suits the lane, not whichever network the outbound label happened to use, protecting cost and speed on both legs.