During the European Small Business Alliance (ESBA) event on 27 June, two entrepreneurs gave insights of which barriers they are facing on a daily basis when selling across border. Lars Andersen from My Nametags/Arty Lobster, and Andrea Goenner from Garnwelt explained the opportunities but above all challenges of a European Digital Single Market.
The main barrier is VAT
VAT is the main barrier to cross-border e-commerce according to the two online merchants. This issue has also been pointed out by Ecommerce Europe’s Cross-border E-Commerce Barometer 2016 as one of the top challenges for merchants. “You have to pay VAT in a country when you reach a certain threshold with your sales in the country. However, if you register in the country when you reach the threshold only, the national authority will ask you to pay the VAT for the rest of the fiscal year with interests”, said Andrea Goenner. The two entrepreneurs called for a one-stop-shop VAT system, where a company will have to register and refer to one authority only. The European Commission published in April its Action Plan on VAT and it will present a legislative proposal by the end of the year to modernize and simplify VAT for cross-border e-commerce.
Ecommerce Europe welcomes the Commission’s plan and in particular the proposals for the extension of the current Mini One Stop Shop to all distance sales, the introduction of common EU-wide simplification measures to help small start-up e-commerce businesses, the streamlining of audits and the removal of anti-competitive VAT-related exemption measures for third country suppliers.
Consumer trust is still a key challenge
The two entrepreneurs also raised concerns about consumer trust. They called for a pan-European certificate ensuring that a specific online shop is reliable for consumers and compliant with the European Consumer Law. This is exactly why Ecommerce Europe has launched its European Trustmark which provides better protection for consumers and merchants by establishing one European set of rules and by ensuring clear communication on these rules. The Ecommerce Europe Trustmark is now certifying more than 10,000 online shops and Ecommerce Europe has a dedicated complaints handling service for consumers.
European Commission presents the eCommerce Package
The e-commerce sector has not yet reached its full potential. Indeed, in 2015, only 9% of EU enterprises in the retail sector sold online to consumers in other Member States, 24% did so domestically. In order to boost e-commerce, the European Commission recently published the eCommerce Package with proposals addressing geoblocking, cross-border parcel delivery services, the revision of the Consumer Protection Cooperation (CPC) and the revised Guidance on the Unfair Commercial Practices Directives (UCPD). Kamila Kloc, Deputy Head of Cabinet for Vice-President in charge of the Digital Single Market, Andrus Ansip, presented the Package. The “shop like a local” concept established in the geoblocking legislative proposal proved to be the most pressing issue for the entrepreneurs. Merchants were more interested in knowing how the Commission plans to tackle the barriers currently preventing them from selling and delivering in a country rather than not forcing them to sell or even deliver to the country.
In general, Ecommerce Europe welcomes the eCommerce Package. The association is pleased to see that the proposal on geoblocking does not contain an obligation for online merchants to deliver everywhere in the European Union and that they are free to set their own pricing policies. According to the proposal, foreign consumers will be allowed to shop like locals under certain conditions. Ecommerce Europe noticed that the Commission made some efforts in clarifying which law is applicable in the cases covered by the geoblocking proposal, but asks EU policy makers for further fine-tuning of the provisions to prevent legal uncertainty for both online merchants and consumers. Besides that, Ecommerce Europe still believes that the most effective way to prevent merchants from geoblocking is to accelerate the harmonization process. Moreover, imposing an obligation to sell to everyone, but not to deliver everywhere, must always lead to the application of the rules and regulations of the country of the trader, and potential negative effects on consumers must be taken into account.
Ecommerce Europe also supports the revised Guidance to the Unfair Commercial Practices Directive, to which Ecommerce Europe actively contributed through Multi-Stakeholder Groups organized by the Commission. Concerning the revision of the CPC Regulation, Ecommerce Europe hopes that the proposal will bring more uniformity with regard to the cooperation of supervisory authorities in cross-border cases.
For an overview of Ecommerce Europe’s recommendations on these issues, please click here to read the Priority Paper and the more detailed position papers.