- On September 13, 2018
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So your business is booming in the US market, you want to stick with an e-commerce platform that works well and you’re considering expanding into Europe, where do you start?
The European market is rapidly expanding, with the e-commerce industry turning over a recorded €534 billion in 2017 – and you could be a part of it! Here we discuss 5 simple things to ensure the best start when breaking into the European market.
1. Ensure you are compliant with the local VAT (Value Added Tax) legislation
It may seem like we’re jumping straight into the nitty-gritty part of your expansion, however, there is definitely something to be said about getting your taxes in order before moving full steam ahead with the fun stuff! European VAT is nothing to be afraid of (unless your plan is to ignore it completely) and can be navigated easily enough with the right tax advisor completing your registrations and filings. If you do not have a European company, you will need to register for VAT in the country (or countries) you plan to fulfill your sales from. A common misconception is that there is a sales threshold where you do not have to apply for VAT until you hit this specific turnover. As an “overseas seller” there is no threshold and VAT registration is required immediately, along with the regular filings and charging your customers VAT at the applicable rate.
2. Do your market research
Shipping, pricing, translations, warehousing, labeling, trademarks, EORI – just a few of the aspects you should investigate in order to really hit the European market head-on. What can you do to make your products stand out and be competitive in a quickly growing Amazon market? Do not assume that you can copy and paste your US e-commerce business strategy, even for your English-speaking friends across the pond!
3. Be aware of your fulfillment options
Although Amazon fulfillment is the e-commerce sellers dream, with the processing of your orders being completing taken off your hands… there are a variety of options to consider! Amazon fulfillment can be completed from one European country or multiple (sneak peek to point 4) or by an independent warehousing/ fulfillment provider or even by yourself. The Amazon EFN (European fulfillment network) allows you to choose where your stock is held and enables fulfillment of sales across the whole of Europe from just one country. All sales will then be subject to VAT to that country until certain distance selling threshold is met. When starting out in Europe, most sellers begin here so that only one VAT account is initially required.
4. Consider the PAN-European program
Amazon has (not-so-recently) launched a PAN-European fulfillment program that enables e-commerce sellers to reach more customers with ease. With the Pan-European program, sellers can ship their inventory to UK fulfillment centers and then sit and wait for Amazon to distribute it throughout their fulfillment centers in Europe based on anticipated demand. Amazon has more than 25 fulfillment centers distributed across 7 European countries (UK, Germany, France, Spain, Italy, Poland, and the Czech Republic). The fluidity of your stock should lead to faster shipping times and lower delivery costs! However, there is also an additional VAT obligation as your products will be stored in multiple countries, therefore changing the place of supply at Amazon’s discretion meaning you will require multiple VAT accounts. Yes, it may seem like a lot of additional administration and headache, but PAN-European fulfillment should be considered at one point or another.
5. Engage a local expert on the “tax bit”
Taxes in your home country can be hard enough without also then taking on the further responsibility of filing on another continent and in another language! European legislation is regularly changing and will continue to change, especially in the anticipation of BREXIT (although this may quickly be turning into a myth). Staying on top of the legislation and ensuring your business is compliant is essential in maintaining your European seller account so don’t risk it all by going it alone! Besides, the less time you spend flapping around with VAT the more time you can spend on your core business and what you do best…selling!
About AVASK Accounting & Business Consultants
AVASK are on hand to assist you in your expansion so please do not hesitate to reach out to us via email or phone for a free consultation. We look forward to welcoming you and your business to the European market!
US Phone: 213-256-0537, 213-330-4904
Website: www.avaskaccounting.co.uk, www.ukvat.uk.com