Expanding Your Business to Europe: A Compliance Guide for Online Sellers

As an online seller looking to expand into Europe, you've probably already recognized the incredible potential of this diverse and rapidly growing market. However, entering Europe is not just about finding the right products or targeting the right audience. Compliance is the foundation for sustainable success.

Three key compliance areas that you need to notice are VAT (Value Added Tax), EORI (Economic Operators Registration and Identification), and EPR (Extended Producer Responsibility). These are the foundation for running a compliant and seamless e-commerce business in Europe.

VAT: The Tax You Can't Ignore

VAT, or Value Added Tax, is a consumption tax applied at every stage of a product's journey—from import to final sale. VAT must be collected and remitted in every country where you sell or store goods.

You'll need a VAT number if:

1. You store inventory in Europe. This applies whether you use Amazon FBA or third-party warehouses.

2. You exceed a country's distance selling threshold. If you ship goods from one EU country to another and your sales surpass the threshold, you must register for VAT in the destination country.

3. You're importing goods into the EU. The VAT number is required for customs clearance.

Why Is VAT Compliance Important?

Failing to register for VAT can lead to:

- Platform Restrictions: Amazon, eBay, and other platforms won't let you sell without a valid VAT number.

- Customs Delays: Goods stuck at customs due to missing VAT documentation.

- Hefty Penalties: Backdated taxes, fines, and even suspension of operations.

On the flip side, VAT compliance allows you to reclaim import VAT, which can significantly reduce your costs.

EORI: Your Passport to European Customs

The EORI (Economic Operators Registration and Identification) number is a unique identifier used by the EU to recognize economic operators in customs clearance, tax refunds, and import/export declarations. It is an essential requirement for businesses engaging in cross-border trade within the EU. Goods cannot be passed via customs without an EORI number, so it is an important part of sellers compliance.

To obtain an EORI number, sellers must first register for a VAT number, as the two are closely connected. Once registered, the same EORI number can be used across the EU. But after Brexit, if you want to import or export goods in the UK, you need to apply for a separate EORI number with a GB prefix. Additionally, if a seller's VAT number becomes invalid, their EORI number will also be deactivated, except in Germany, the validity of an German EORI number is not tied to the VAT number.

The format of the EORI number varies by country.

For instance, the UK uses the format GB + VAT number + 000 (e.g., GB123456789000);

Germany's format is DE followed by 15 digits, which does not require linking to a VAT number;

In France and Spain, EORI numbers are linked to their VAT systems, such as SIREN or SIRET numbers.

EPR: The Environmental Compliance Badge

Extended Producer Responsibility (EPR) is Europe's way of holding sellers accountable for the environmental impact of their products. Under the "polluter pays" principle, producers must cover the costs of recycling or disposing of products, ensuring that your business practices align with environmental sustainability goals and minimize the ecological footprint.

If you sell in Europe, platforms like Amazon and eBay now require you to provide valid EPR numbers for regulated products. Without them, you can't list or continue selling these items.

Steps to Become EPR Compliant in the EU

Broadly speaking, there are 3 steps that need to be taken to become EPR compliant:

1. Registration: You must register with a Producer Responsibility Organization (PRO), and obtain an EPR registration number, which is a one-time process. For e-commerce sellers, make sure your registration details match those on your e-commerce account on eBay, Amazon, etc., including your company name and address. Once you've received your registration number, you must relay it to your marketplace as proof of compliance.
2. Reporting: The second stage of remaining compliant with EPR directives requires you to accurately report your sales and other data to the PRO for the specific period in question.
3. Payment: Lastly, you must pay eco-contribution fees relevant to the product category you've registered under. This is dependent on the nature of products as well as the number sold for the reporting period.

What Happens if You Don't Comply with EPR

It must be noted that non-compliance with EPR regulations is a legal offense. Therefore, it is paramount that businesses register and document all of their products with the relevant authorities in the EU to ensure compliance. Below are some of the possible consequences of not following the directives:

1. Businesses might be required to pay hefty financial penalties for violating EPR regulations.
2. Companies could be subject to legal action from authorities.
3. Loss of reputation and trust in the marketplace, affecting their ability to do business.
4. Trade bans, completely limit their participation in the market.

EPR regulations vary by country, so you'll need to register in each country where you sell regulated products. While this may seem like extra work, compliance not only ensures you meet legal requirements but also helps you build a brand that appeals to Europe's environmentally conscious consumers.

Simplify Compliance with VATAi

Compliance can feel overwhelming, especially if you are new to the European market. As a global one-stop compliant platform, VATAi is here to help you navigate Europe's compliance.

Whether you are registering VAT, applying for an EORI number, or ensuring EPR compliance, our experts provide tailored solutions to keep your business running smoothly. Ready to expand into Europe? Let us handle the compliance, so you can focus on growing your business.

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