A Lively Market for Cross­‐Border eCommerce EU DEF 10-12-2019

• 2016 – Now: Partner – BMGR Chartered Accountants & Legal Advisors.
• 2016 – Now: Established and major partner – Financial, Accountancy and Tax, Marketing and Strategy Director in Amazing Eataly Limited (trading as UnKnownItaly), based in Edinburgh (UK). UnKnownItaly is a warm-hearted business specializing in the importation and sale of Italian genuine and fine quality food & beverage in Scotland and UK.
• 2010 – 2011: Master’s Course in Business Arbitration – Foundation of Chartered Accountants in Milan.
• 2003 – 2004: Master’s Degree in Management, Business, Administrative and Financial Consulting – Università Cattolica del Sacro Cuore in Piacenza (Italy).
• 2000 – Now: Chartered professional Advisor at the Court for Company Restructuring and re Organization.
• 1991 – 1995: Degree in Economics and Management – Università Cattolica del Sacro Cuore in Milan.
• 1998 – Now: Chartered Accountant, Tax and Legal Advisor.

BMGR Specialized in professional consulting services, supporting the costumer in all his operational needs, focused on:

• Administrative, Accountancy & Tax Services, Market Analysis, Economics, Financial and International Planning
• Business structuring and consolidation of new settled companies and business units of non-resident companies, especially operating in Italy and UK, in the EU market, Law and Taxation System.
• Vat Registration and Declarations, Unified Tax Return, Property Tax declaration, Tax and Vat consolidation, registration of contracts with the Revenue Agency
• Contract Management and Invoicing between Italian and foreign subsidiaries
• Optimization of the Operating and Management System for complete automaton of data and reports
• Preparation of procedures with the various business areas in order to monitor and optimize compatible data flows, purchasing procedures, expense reports, use of company assets, communication between the various company areas.

• Revenue in the eCommerce market will amounts to US$346,155 m in 2019.
• Revenue is expected to show an annual growth rate (CAGR 2019-2023) of 8.5%, resulting in a market volume of US $479,131 m by 2023.
• The market’s largest segment is Fashion with a market volume of US$100,128 m in 2019.
• User penetration is 70.1% in 2019 and is expected to hit 76.1% by 2023.
• The average revenue per user (ARPU) currently amounts to US$582.43.

Source: Statista

The European Union (EU) is an economic and political partnership between 28 European Countries. The Eurozone identifies the 19 Countries that have adopted a common currency (euro).

f=forecast (confirmed)
Source: Ecommerce Europe

*Gross Domestic Product (GDP)
Source: Ecommerce Europe

Source: Ecommerce Europe

• The drop of the Pound Stirling will not off-set the tremendous loss in shoppers convenience with long parcel delivery times.
  • If a shopper is willing to wait long for a parcel delivery because of the price difference, the UK will always lose to China.
• Moreover, shoppers will also have to pay customs duties, which can for some product categories be very high.
  • The number 1 e-commerce product category is clothing and that is an area where high customs duties still occur.

• Since 2010, the company has significantly expanded its presence in Europe, investing in infrastructure, real estate, services and jobs.
• In 2019, Amazon expanded its business in 8 European countries: Austria, Czechia, France, Germany, Ireland, Italy, Poland and the United Kingdom creating 11,580 jobs.
• The company operates distribution or fulfillment centres, corporate offices, customer service centres, delivery stations and development centres across these countries.

In net revenue terms, Europe is the largest single international market for Amazon, representing over half of its international business.
Net revenue in 2018 was EUR 27.9 billion ($31.4 billion).

The eCommerce sector is at a turning point. Now more then ever, the decision taken by EU Policymakers determine the success of retailers globally.

What makes an e-retailer competitive in a global market is profoundly changing.

The European Union (EU) has published new EU Value Added Tax (VAT) rules that are intended to reorganize the VAT regime for ecommerce.

Since online sales of goods and services are becoming more and more important the european VAT rules, which were drafted long before the boom of the internet, had to be updated.

The Moss Scheme

Currently Telecommunication, Broadcasting an Electronic Services, both B2B and B2C, are deemed to take place where the final customer is established implying that VAT is due in the EU Member State of the final customer.

The MOSS SCHEME enables the service provider to report the turnover achieved and the VAT due per Member State concerned with a single electronic quarterly declaration (to be submitted in the Member State of establishment).

As from 2019, the EU has introduced a threshold of € 10.000 allowing EU service supplier to charge VAT in the Member State where the supplier is established.

The use of the threshold is not obliged, implying that the service supplier can also opt to charge VAT in the Member State where the customer is established (this would be interesting in case for example a lower VAT rate is applicable for the services supplied).

An important note to take into account is that the threshold of €10,000 includes the telecommunication, broadcasting and electronic services supplied EU-wide in a B2C relationship (the threshold should thus not be seen per Member State).

If a service supplier of telecommunication, broadcasting and electronic services does not exceed the EU-wide annual turnover of €10,000 in B2C cross-border sales, the supplier has the following 3 options:

1. He charges VAT in the Member State where he is established;
2. He charges VAT in the Member State where the customer is established, but makes use of the MOSS scheme (and therefore he does not require a local VAT identification number);
3. He charges VAT in the Member State where the customer is established, via a local VAT Identification Number in the Member State of the customer.

If the threshold of €10,000 is exceeded, the supplier can only apply the last two options. If the supplier does not exceed the threshold of €10,000 but opts to apply option 2 or 3, the supplier is obliged to apply the option for at least two years.

As of 2019, another threshold will be introduced for the number of pieces of evidence a service supplier of telecommunication, broadcasting and electronic services must keep to prove where his customer is located.

Currently the service supplier must keep two pieces of evidence (examples: the invoice address, the bank details used, the IP address used, etc.).

As of 2019, the service supplier only needs to keep one piece of evidence if his annual turnover of cross-border B2C sales of telecommunication, broadcasting and electronic services does not exceed the EU wide threshold of €100,000.

• Any Trader can register for VAT Number if he intends to carry out distance sales from a third country or territory to the EU
  • Any Trader not established in the EU must be represented by an Intermediary (Fiscal Representative)
  • The trader not established in the EU should register in the Member State of the Intermediary from whom he has a consultancy advise (there must be an administrative cooperation in place)
  • The Trader established in the EU or Intermediary must register in the Member State of his business or where he has a fixed establishment
  • The Intermediary must be authorized and identified to act as such
• Member State (MS) must provide for electronic registration (via web portal)
• Trader must register before making first supply
• Registration information to be provided by the trader includes: full name and surname, address, company name, trading name, email address, Website, passport or ID.

And we can only advise you to already start preparing your business for these changes.

SG&BMGR have dedicated team of professionals that are very keen to advise the impact of the new EU VAT LEGISLATION on your business.