However, expanding your business in the EU comes with its own set of challenges. In this post, we explore the main considerations for any online seller or e-commerce business when planning an EU expansion.

The Benefits of an EU Business Expansion

The EU e-commerce industry is expected to reach US$730.30bn in 2023, making it the ideal time to pursue a business expansion. Here are a few more reasons why selling your products or services in Europe is a good idea:

1. Large and Diverse Market

The EU is a massive market with a population of over 450 million people. By expanding into the EU, you gain access to a broad customer base with diverse preferences and purchasing power. This presents significant opportunities for growth and increased sales.

2. Single Market and Free Movement of Goods

The EU operates as a single market, allowing for the free movement of goods and services among member states. This means that once you establish your business in one EU country, you can easily expand and sell your products across the entire EU without facing trade barriers, customs duties, or complex regulations.

3. Strong Purchasing Power

EU consumers have relatively high disposable incomes and a strong appetite for online shopping. By tapping into this market, you can target consumers who are willing to spend on quality products and services. This can potentially lead to higher average order values and increased revenue.

4. Cross-Border Logistics and Infrastructure

The EU has a well-developed logistics infrastructure, including efficient transportation networks and reliable delivery services. This facilitates the movement of goods across borders, ensuring that your products can reach customers quickly and cost-effectively.

How to Grow Your Business in the EU

So, you know you want to expand into the EU, but you’re not quite sure how to go about it. Here are a few things to consider that will help you get your EU business expansion off the ground.

1. Understand the EU Single Market

Before getting your business expansion underway, it’s crucial to gain a deep understanding of the EU single market and its diverse consumer preferences. The EU is comprised of 27 member states, each with its own cultural nuances, languages, and consumer behaviors. Conducting market research and analysis will help you identify target markets, understand local regulations, and tailor your marketing strategies accordingly.

2. Adhere to EU Regulations

The EU has implemented comprehensive regulations to protect consumers and ensure fair competition. If you’re going to be doing business in the EU, you must familiarize yourself with these regulations, such as the General Data Protection Regulation (GDPR) and the Consumer Rights Directive. By making sure your e-commerce business complies with these EU regulations, you build trust with customers and avoid potential legal issues.

3. Localize Your Website and Content

Another important step when attempting to break into the EU market is localization. You should localize your website and its content to better cater to the language and cultural preferences of different member states. Translating your website into multiple languages and adapting your content to target local holidays and events, for example, will enhance the user experience and increase your chances of connecting with your audience.

4. Logistics and Fulfillment

The EU market demands reliable and timely delivery of products. Partnering with local fulfillment centers, such as those offered by Fulfilled by Amazon, or establishing a network of distribution centers across the EU can significantly improve your shipping capabilities and reduce delivery times. If you’re already an Amazon or eBay seller, then the logistics of your EU expansion will be a lot simpler.

5. Payment and Currency Options

Offering multiple payment and currency options is crucial for successful e-commerce operations. Supporting popular payment methods such as credit cards, digital wallets, and local payment systems like iDEAL (Netherlands) or SOFORT (Germany) will instill confidence in your customers and improve conversion rates. Implementing secure and seamless payment gateways that comply with EU payment regulations will improve the overall shopping experience.

6. Taxation and VAT Compliance

Navigating the complex EU tax landscape is vital to avoid financial penalties and maintain VAT compliance. Each member state has its own value-added tax (VAT) regulations, and understanding these rules is essential for your e-commerce business. Consider consulting with tax professionals who specialize in EU tax laws to ensure your business is correctly registered for VAT and that you comply with all the relevant rules and regulations.

7. Marketing and Customer Engagement

Creating a strong brand presence and engaging with your EU customers are critical for expanding your e-commerce business. Tailor your marketing strategies to focus on specific member states and leverage local advertising platforms, social media channels, and influencers. Build trust and credibility by incorporating customer reviews and ratings. Offering localized customer support through multiple channels, including email, live chat, and phone, will foster customer loyalty and satisfaction.

Start Your EU Single Market Expansion Today

Expanding your e-commerce business in the EU can be a rewarding endeavor if approached strategically and with careful consideration of the unique challenges and opportunities it presents. If you plan well and seek the advice of specialists where necessary, there’s no reason why your EU business expansion shouldn’t be a success.

For help with your business expansion, get in touch with the VAT compliance experts. Book a call with Taxually to find out more.

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About the Author:

Jenny Longmuir is a copywriter at Taxually.com, a specialist in VAT compliance technology. She has over 10 years of experience in content creation for a number of industries.

In a nutshell, compliance describes the process of acting, trading, and selling in accordance with the applicable law and regulations. The guidelines in question can concern a variety of fields – from taxes to customer protection to safety and environmental protection. Some are more important for Amazon FBA sellers, some are less so. 

Among the most crucial regulations to be compliant with for Amazon sellers are VAT and data privacy guidelines. These are topics in which specialised tools can help entrepreneurs to act in conformity with the law. The following article will show why compliance is so important and how to achieve it. 

What Is Legal Compliance and Why Is It Important?

If you are selling on Amazon Europe and fulfilling orders with Amazon’s Fulfilment Programs you are most likely serving customers in a variety of countries. The more countries you are selling in, the more local and specific laws and regulations you have to follow – ranging from environmental protection laws to packaging requirements. 

Of course, the specific pieces of legislation vary. However, if you are non-compliant with legal matters, you might not only face penalties but also exclusion from marketplaces or worse. In order to prevent fines and punishment and to make sure you follow the variety of guidelines in place across Europe, you can use Legal-Compliance-Management Tools like Libryo. 

These tools help online shop owners and Amazon sellers navigate complex regulations clearly and securely and introduce them to all laws that apply and have to be observed in the respective countries to which they sell by offering location-specific and industry-specific legal registers. 

Furthermore, all updates and changes to the laws and regulations are always prepared in simple, jargon-free language to also offer users without legal knowledge the opportunity to check compliance with local legal requirements.

What Is VAT Compliance and Why Is It Important?

VAT compliance describes the lawful fulfilment of duties concerning VAT – the Value Added Tax. These include – among other responsibilities – the obligation to register for VAT at a certain point, the task of collecting the right amount of VAT from end consumers, the obligation to turn in regular VAT returns once registered, and the task of paying the VAT debt to the authorities to which the VAT is owed. 

For example, if you establish a business in your home country you will need to immediately also register for VAT. Additionally, you need to register for VAT in foreign countries if your turnover through transactions with customers located abroad crosses a certain threshold or if you store products abroad, as is the case when using Amazon Fulfilment Programs. Once registered you need to submit regular VAT returns adhering to the local rules, formats, and deadlines. 

Customers from different countries need to be charged different VAT rates, which means you need to implement a corresponding system in your online shop or Amazon storefront to charge the correct VAT rates. Lastly, the debt needs to be paid on time and most probably to several different tax authorities individually.

Not taking care of VAT compliance will lead to difficulties. If you forget to turn in VAT returns or submit faulty returns, you will most likely face fines or late fees. Furthermore, if you forget to register for VAT in time and don’t charge customers VAT, you are still subject to VAT nonetheless. In this case, you will not only face fines but will also need to pay VAT debts even though you didn’t charge VAT, therefore reducing your profit. 

That’s why VAT compliance is so important and that is where tools like hellotax come in. Specialised in VAT for E-Commerce and Amazon selling in Europe, the Amazon FBA accountant hellotax can take care of all your VAT duties – from registration to the submission of returns. 

The hellotax VAT compliance software monitors all your transactions, receives your tax letters, alarms you if a deadline is approaching, and automatically compiles reports. 

The hellotax team files your returns and can also assist you in forging ahead with the One-Stop-Shop, the EU’s alternative to multiple foreign VAT returns, which enables you to declare all intra-European cross-border sales in a combined return in your home country. 

What Is Privacy Compliance and Why Is It Important?

Another important topic is data protection and privacy – especially if you’re an Amazon seller active in the European Union. That’s because the General Data Protection Regulation (GDPR), which was introduced in the EU in 2016, places maybe the highest demands ever on companies when it comes to data security. 

Any company that receives personal data from European customers must ensure that the data is stored safely, only used for certain purposes, and diligently deleted. The data protected includes names and website usage data, as well as addresses, account information, and transaction data of customers on online platforms such as Amazon. 

Privacy compliance in the European Union might be the most important topic for Amazon sellers, though the most often overlooked, as the penalties imposed by the European Union for non-compliance with the General Data Protection Regulation are very high and might easily ruin a self-managed Amazon business. 

Help comes in the form of tools like privIQ, formerly GDPR365. Data security compliance tools such as these offer a complete overview of requirements and tips on how to implement them, opportunities to monitor data management processes and security measures, the possibility to assign tasks to individual employees or the data protection officer, alarms to access requests and data security violations, and more.

How Can I Implement Compliance Measures?

If you are managing your Amazon FBA business by yourself, you only have to research regulations or use tools like the ones presented above to trade and sell compliantly across the European Union. However, if you have employees or business partners, you need to make sure everybody is aware of compliance measures you have implemented or steps that have to be followed. 

There are a variety of digital learning tools and platforms on the market that serve to create compliance awareness in your business. They offer everything from online course libraries with videos on important topics such as GDPR, information security, and tax law and functions to create bespoke training content to ratings, questionnaires, surveys, and other tools to engage employees. 

While compliance tools serve as the first step toward legal, VAT, and privacy compliance for Amazon’s sellers in Europe, digital learning platforms can ensure that your whole team acts in conformity with regulations when scaling your Amazon shop. This way, penalties are avoided and you can continue concentrating on your core business while trading and selling legally. 

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About the Author:

hellotax is a tech company that builds automated solutions for VAT compliance. Companies of every size use our software to ensure their VAT compliance while selling online in Europe.

However, tax obligations in Europe have been costly and complicated for Amazon EU sellers. As a way of helping Amazon sellers manage their European tax, Amazon invites sellers to join VAT Services on Amazon.

This latest solution offered by Amazon will make your business expansion to Europe less complicated. With a fee of €33.30 per month, tax obligations in Europe will be filed via a third-party tax service provider.

What is VAT Services on Amazon? 

Amazon Seller University – UK: A screenshot (cropped) of VAT Services on Amazon; Retrieved Date: Sept. 14, 2021  from https://youtu.be/9ctlFU14bLs

VAT Services on Amazon is a VAT compliance solution that accommodates your VAT registration and filing obligations when you expand to the EU marketplaces. 

The primary purpose of this Amazon solution is to help you deal with the European VAT landscape, particularly in the United Kingdom, Germany, France, Italy, Spain, Poland, and the Czech Republic. 

Addressing Value Added Tax obligations in Europe can be confusing for sellers, especially since European VAT rates vary between countries and the type of products sold on the EU marketplaces. 

Sellers can now deal with VAT compliance on the Amazon EU marketplaces efficiently and easily through VAT Services on Amazon. Amazon’s chosen third-party tax service provider will be the one to process VAT compliance for you. 

Consequently, this VAT compliance solution offered by Amazon inevitably enables sellers to spend more time on other areas of concern when expanding across Amazon EU marketplaces. 

What is Tax Representation?

If you are an Amazon seller not based in Europe, you will need to delegate Tax Representation to register for VAT in EU countries. 

Simply put, tax representation is the process where someone acts on your behalf as a non-domestic seller in the EU. This tax representative can be an individual or a business that will help you with your tax obligations in Europe.

When you join VAT Services on Amazon, you can disregard the tedious process of searching, assessing, and later on, hiring a third-party tax service provider since VAT Services on Amazon has it covered.

Apart from covering the aforementioned processes, this latest Amazon solution also covers the expenses incurred for the first six months of filing and tax representation. Once the promotion period is over, you will be charged the annual fee. 

Who is Eligible for VAT Services on Amazon?

When it comes to eligibility for the Amazon VAT service, the eCommerce giant stipulated that those with Amazon businesses based in an EU country are eligible to use VAT Services on Amazon without any constraints.

Furthermore, if your business is situated in a country outside of the European Union, such eligibility is limited only to the United Kingdom, Germany, and the Czech Republic.

It is also worth noting that VAT Services on Amazon do not support VAT registration or filings in the country where your business is based.

How do you Sign up for VAT Services on Amazon?

If you wish to Sign Up for VAT Services on Amazon, here is what you should do:

• Log into your Amazon Seller Central account. Once logged in, navigate to the Manage Your VAT section, under the Reports Tab. 
• Once redirected, you will be given a selection of EU countries. After choosing, you will have to confirm your business details.
• Once company information has been confirmed, you can click on Agree and Continue button to enroll.

Why Should you Expand to Amazon EU?

If you are still hesitant to expand your Amazon business to Europe, here are some reasons why more and more Amazon sellers are branching out to Amazon EU marketplaces. 

• Sales Diversification

Expanding to Amazon EU marketplaces means more sales opportunities and revenue. Sales fluctuation on a single market can be avoided when you join Amazon EU since it has various marketplaces with different peak sales and holiday seasons.

• Logistics Leverage

Similar to Amazon.com, Amazon EU marketplaces also offer sophisticated logistics and fulfillment services. This is especially true if you are an Amazon FBA seller.

• Sales Expansion

Needless to say that expanding the European market means potential sales increase. Amazon UK and Germany are the best starting points for your expansion as they represent some of the largest eCommerce countries in Europe. 

• Growing International Market

The expansion of Amazon in Europe is far from being over. There are still other avenues for expansion which means more sales opportunities and growth. As Amazon EU marketplaces grow, so will your business. 

Prepare Your Expansion

To help you with your pricing strategy, the use of an automatic AI repricer is recommended. An AI repricer can easily adjust your listing price to offer a competitive price across Amazon international marketplaces.

To give you a better understanding of Brexit and how it affects eCommerce, especially the Amazon industry, here are some key points to remember. 

Changes After January 1, 2021

With the exit of The United Kingdom from the European Union, significant changes will be observed by both parties. These changes center mainly around how the aforementioned parties will have to trade, work, and live together. 

In the context of the trade relationship and upon the effect of Brexit, the UK-EU trade agreement will be implemented. This includes the reduction or elimination of taxes for trading goods across borders. 

Additionally, limitations for a number of goods that can be traded between the UK and EU have no limit. This shared trade rule aims to avoid the price increase of goods between two parties. 

The Impact of Brexit on European Amazon Marketplace 

Like any other company, Amazon has likewise prepared counter-measures while anticipating Brexit. Here are some of the changes highlighted by Amazon prior to January 1, 2021:

• Amazon has stopped the inventory removal orders for cross border inventory. It was implemented by Amazon last November 14, 2020. 
• Pan-European FBA inventory transfers have also been halted by Amazon since December 18, 2020. 
• Cross Border Fulfilment via European Fulfilment Network (EFN) started to wind down last December 21, 2020, and fully stopped last December 28, 2020. 

Now that the UK has formally left the EU’s Single Market and Customs Union, Amazon has laid down its implication for its Amazon Selling Partners which took effect last January 1, 2021. An Amazon News detailed that:

• FBA offers using EFN will not be fulfilled across the UK-EU border.
• Pan-European FBA inventory transfers will stop between the UK and EU (however, Pan-European FBA will continue to transfer inventory within the EU region, supporting your sales on Germany, France, Italy, and Spain sites)
• To mitigate the impact of these changes, you should consider splitting your inventory and sending it to a fulfillment center in the UK and the EU, so that you have sufficient stock on either side of the new customs border
• This may require you to ship your products across the new UK-EU customs border and provide additional information as part of a customs declaration

Additionally, Amazon sellers who are categorized under Merchant Fulfilled Network (MFN) may still fulfill orders using third-party carriers. However, MFN Selling Partners are obliged by Amazon to provide additional information, including the following:

• Economic Operator Registration and Identification Number/s
• The commodity codes along with the info about the valuation and type of goods being shipped. 
• Details of the recipient of the said goods

Protecting Amazon Sales Amidst Brexit 

In order to mitigate the impact of Brexit on your Amazon sales, Amazon has recommended that FBA sellers split their inventory between the UK and the EU. This simply means that FBA sellers should send inventory items to the Amazon UK warehouses, as well as the Amazon warehouses within the EU regions. 

By splitting the inventory, sellers will have sufficient stock for both the UK or EU marketplaces. Amazon emphasized that sellers can protect their European sales by “inbounding to both the EU and UK FC networks through the Multi-Country Inventory.” 

Since your stock or inventory items will potentially be located close to your customers, hopefully,  sales will be maximized even after Brexit. 

Pan-European Amazon Business Preparation Tips

With the UK leaving the European Union, sellers should prepare accordingly to avoid any debilitating issues or concerns. Here are some tips on how Amazon sellers could prepare their business amidst Brexit. 

• For both newbie and experienced sellers, deciding on which seller program to utilize will be helpful. Amazon sellers can choose from FBA, FBM, SFP, or even all fulfillment programs. 
• Amazon sellers should also take note of their VAT registration. Sellers should complete VAT registration for all inventory items for all countries within the EU region.
• Whenever required, Amazon sellers should obtain certifications, licenses, and/or permissions from IP rights owners. 
• Amazon sellers should also prepare for customs declarations by onboarding with a customs broker.
• Amazon sellers should register for both a UK and EU Economic Operators Registration and Identification number.
• Compliance with the commodity codes should be observed while ensuring that listing information is accurate. 
• Since you will be operating in various marketplaces, make sure you stay competitive in both the listing and repricing approach. Make sure to use a reliable Amazon repricer for your repricing strategy. 
• Most importantly, Amazon sellers should see to it that Multi-Country Inventory Settings in Seller Central have been enabled. 

To be properly guided with your Amazon business amidst Brexit, you may CLICK HERE for more details.