5 Major Trends of the EU E-commerce Industry and the Biggest Drivers in 2021

Psoted on: April 29, 2021 at 7:20 am, in

Overview:

  • The Covid-19 pandemic has contributed to the development and rapid success of the e-commerce industry globally and in the EU particularly in 2020.
  • The move to Strong Customer Authentication (SCA) has a huge impact on the online trading market in the EU. 
  • Brexit-related changes in VAT charges have affected e-commerce in both the EU and the UK. 
  • To foster growth and decent profits from e-commerce in 2021, entrepreneurs need to invest in specific capabilities on their online portals.  
  • The future of e-commerce lies in the automation of processes, direct communication with customers by the brand, and creating the effect of a visit to a brick-and-mortar store for online shoppers.  

The Covid-19 pandemic has had an enormous impact on all areas of modern society. The e-commerce industry is hardly the only sphere that could not only withstand the blow but also emerge victorious from the unequal battle with coronavirus. As a consequence of the Covid-19 outbreak, people around the world and the EU began to buy more on the Internet, which spurred the development and profitability of online sales. The pandemic has played to the e-commerce market’s advantage. According to Statista.com, e-commerce retail sales worldwide were $4.28 trillion in 2020, and e-retail revenues are projected to grow to $5.4 trillion in 2022. 

But despite the impressive figures, not everything is as smooth and rosy as it seems, and yet there are significant obstacles for those entrepreneurs who are engaged in e-commerce in the EU. 

What EU E-commerce Entrepreneurs Should Keep a Close Eye On 

Strong Customer Authentication (SCA) 

One of the major issues affecting e-commerce this year is the move to strong customer authentication (SCA). Seamless authentication and authorization through digital identity are designed to ensure future conversion rates. Nevertheless, persistent differences in readiness and national enforcement of this technology have caused an increase in transaction failures across the EU. 

Online merchants will have to continue to adapt to the demand for seamless payments, especially with the ever-growing popularity of mobile and wearable payments. 

Brexit-related Changes in VAT Charges 

The end of the UK’s membership in the European Union is being keenly felt by both offline companies and their online “mates” operating in these territories. Because of the new rules for charging and collecting VAT, online companies began to charge additional delivery fees to compensate for the time spent filling out administrative paperwork. The increase in delivery costs due to new administrative burdens, in addition to VAT and customs duties on shipments sent from the UK to the EU, prompted many British businesses to invest in distribution networks in the EU.  

Clevver can help with the incorporation in many EU countries, such as Ireland, the Netherlands, Cyprus, Estonia, Germany, Georgia, and Italy in order to smooth out the effects of Brexit on your business. 

Key E-commerce Trends to Consider in 2021 

Despite significant obstacles, on a weekly and monthly basis, more and more merchants are launching online projects and entering the e-commerce sector, working hard to grow their business on the Internet to join the ranks of successful merchants and conquer the field of e-commerce. Knowing key e-commerce trends in 2021 can help achieve this aim successfully.  

Let’s take a closer look at e-commerce trends of 2021 and highlight 5 of them that EU entrepreneurs involved in e-commerce should be paying attention to today to succeed tomorrow. 

Transition to D2C  

In 2021, many business owners are expected to start using a D2C scheme actively. By D2C, direct sales of the brand to the end consumer are meant. This way the business can analyze and influence all channels of communication with the user. Without intermediaries, it has complete control over every stage of interaction with the client: from acquaintance to purchase.  

Many large companies have begun to refuse even to cooperate with online marketplaces. Despite the fact that such sites have detailed information about the audience of any brand partner, they are reluctant to share it with suppliers. In 2019, Nike refused to partner with Amazon. The company explained that it wanted to concentrate its efforts on sales through the official website.  

AR Technology  

The main fear of users who hesitate to make an online purchase is not to guess at the color, size, or shape of the product and to waste money and time waiting for delivery. Augmented reality capabilities easily solve this problem. AR-technologies help customers understand how goods will look in reality, not in pictures.  

AI Technology (Voice Assistants)  

Artificial intelligence (AI) acts as an online in-store associate by offering personalized guidance and recommendations to customers. More than that, AI uses shoppers’ past purchase history and browsing behavior to show them products they are more likely to purchase.  

Around 20% of smart speaker owners already use them for shopping-related activities, whether that’s ordering products, creating a reminder, conducting research, or tracking deliveries. This figure is expected to jump to 52% within the next four years. If you’re not currently optimizing your e-commerce platform and fulfillment processes for voice search, get moving or get left behind.  

Buying by Subscription

Let’s talk about the e-subscription market. According to Mckinsey.com, it has been growing at a staggering rate, doubling annually. Specifically, the demand for subscription purchases at a certain interval is increasing. This frees a person from the long and tedious procedure of selecting, paying for, and checking out an item. In addition, stores usually offer increased bonuses or discounts for signing up. For a brand, such a user is a regular customer who regularly buys a monthly or weekly supply of the product of interest. Categories for which users more often subscribe are pet food, baby products, hygiene products, and dietary supplements. 

Mobile Commerce  

The predominance of mobile Internet surfing over desktop surfing was noticed 5 years ago, and since then mobile traffic is only gaining momentum. While initially, the lion’s share of visits fell on social networks, games, messengers, and various applications, now, people have become more active in making purchases through smartphones. Statista.com shows that mobile e-commerce sales are expected to grow about 73% by the end of 2021. At the same time, about 30% of customers will not complete their orders if they notice that the online store is not optimized for mobile shopping.  

Bottom Line  

E-commerce businesses looking to dominate the market must prepare themselves to adopt the latest changes (SCA and Brexit-related changes in VAT charges) and trends as soon as possible. The future of e-commerce lies in the automation of processes, direct communication with customers by the brand, and creating the effect of a visit to a regular store for online shoppers.  

The winner in business is always the one who is able to analyze the current situation competently and adjust to it in time, which we wish everyone who wants to succeed in e-commerce in 2021.

DISCLOSURE NOTICE: Any legal or tax advice in this communication (including any attachments) is for information purposes only and is not intended to be used, and cannot be used against Clevver or its Sender. The sender is neither an Accountant nor a Lawyer and cannot be made liable. Please, contact your tax accountant for individual consultation. Clevver does not provide any legal advice itself. Clevver works together with a network of lawyers and tax advisors that provide all necessary individual legal advice.


Trading Between the UK and EU-Countries after Brexit — VAT Changes Guide

Psoted on: March 30, 2021 at 7:41 am, in

As of Jan. 1, 2021, the UK has completed the process of leaving the EU, which began at the end of January 2020. During the year, representatives of the European Union and the UK discussed how to build further relations between the parties in a variety of areas. Negotiations went on for a long time with varying success. In the course of the discussion the new realities in which the United Kingdom and the countries of the European Union will continue to coexist were defined. 

One of the things that have forever changed in doing business between the aforementioned parties because of Brexit is the rules for charging and collecting VAT on goods and services. Certain changes came into effect on January 1, 2021, and yet others are only going to be implemented on July 1, 2021. To make it easier for those who strictly follow the letter of the law and are directly affected by the Brexit-related VAT reforms, below is essential and structured information on this issue.

What EU Companies Must Keep in Mind when Trading with British Clients

See below the main Brexit-related changes to VAT payments that apply to EU companies selling goods to UK customers:

  • Goods imported into the UK on deliveries, which costs are less than £135, VAT will be charged directly at the point of sale. 
  • For goods with a value less than £15 the Low-Value Consignment Relief (LVCR), which provided for VAT exemption on imported goods, will no longer apply. 
  • If goods are sold through online marketplaces (OMPs) such as Amazon, eBay, Wish, etc. – from January 1, 2021 – the responsibility for obtaining VAT payments will be put on those platforms. 
  • Foreign traders will retain responsibility for accounting for VAT on goods that are already in Great Britain and sold directly to British customers through their website without OMPs engagement. In this case, the overseas seller will have to apply for the VAT ID.

New rules will be relevant when selling goods to British customers if the value of the shipment does not surpass £135. Shipments above this threshold will continue to be eligible for existing customs precepts.

Key Points to Consider for UK Companies Selling Goods to EU Customers

Brexit is a two-sided process, so British companies should also prepare for the new terms of trade with EU countries:

  • The first thing a UK company needs to do is to decide with its EU buyer who will be responsible for paying VAT. If the latter is responsible — the UK company will not be liable for this tax. Otherwise, a British firm is in the right to arrange the import of goods into the EU and the payment of import VAT on behalf of customers through the freight forwarder. The payment to the freight forwarder service is reimbursed at the expense of the seller from the UK. 
  • Resident companies from Great Britain importing into the EU are required to obtain a VAT ID in the country where the goods are introduced. 
  • In the case of trade with several EU states, to avoid registering for VAT ID in different countries at once, the seller may import all the goods in one country. This will make it possible to fall under the EU VAT zero-rate rules in force until January 1, 2021, for intra-EU deliveries.

The E-Commerce VAT Charges

Starting July 1, 2021, a British business entity using the IOSS system will be obliged to charge and collect VAT in the EU country where they sell goods or services according to the established regulations. These goods will then be freed from VAT charges on the importation, allowing them to be released quickly at customs. To use the IOSS system, a seller will have to register as a VAT payer in one EU country (if a company has shares in several EU countries, registration as a VAT payer is mandatory in all those states). 

When the IOSS is not in use, it is possible to apply it to another facilitation mechanism for imports. VAT on imports may be charged to customers by the customs declarant (e.g., postal operator, courier firm, customs agents), who will pay it to the customs authorities through a monthly payment.

Changes to VAT on Services Charges

The alterations to the charging and collection of VAT on services are not as extensive as those on goods but still, they must be considered and well-studied too:

  • With effect from 1 January 2021, the rules that applied to the charging and collection of VAT for the provision of services between the UK and EU have been abolished. Therefore, VAT for the above activities will now be charged as for any other third state that is not an EU member. 
  • For B2B services, the assistance is considered to be provided where the client resides. That is why the UK companies which provide services in the EU are not liable to UK VAT. EU customers will use the “reverse charge” method to show the VAT in their return. Likewise, UK companies buying services from the EU need to apply reverse charge rules in their UK VAT return. 
  • The £8,818 per year threshold for cross-border sales of digital services by UK companies to consumers in the EU no longer applies, so VAT must be paid on all sales. 
  • UK companies providing insurance and financial services to EU clients will now be subject to the existing rules on the supply of these services to customers outside the EU. 
  • The UK and EU suppliers have to VAT register if they have foreign B2C customers in the UK and EU. 
  • UK Financial Services businesses are able to recover input VAT incurred on the sales to EU consumers.

Bottom Line

Brexit is a bilateral process that will affect trade in goods and services between the United Kingdom and EU member states. Both sides will have to be careful and keep a close eye on the new rules. 

Clevver understands the depth of the possible difficulties that Brexit has brought to businesses that have trade relations with the UK and offers its help in finding a possible solution to the problem — incorporation in Ireland! Contact us to learn more.

DISCLOSURE NOTICE: Any legal or tax advice in this communication (including any attachments) is for information purposes only and is not intended to be used, and cannot be used against Clevver or its Sender. The sender is neither an Accountant nor a Lawyer and cannot be made liable. Please, contact your tax accountant for individual consultation. Clevver does not provide any legal advice itself. Clevver works together with a network of lawyers and tax advisors that provide all necessary individual legal advice.


10 Reasons Why Move Your Business to Ireland or the Netherlands before Brexit Gets Finalized

Psoted on: December 1, 2020 at 5:10 pm, in

Great Britain is one of the most important economic players. For that reason, all eyes are on Brexit – on December 31 this year, the UK finally and irrevocably leaves the EU, impacting trade relationships globally. That is why many business owners are looking for a suitable way out of this situation. Which solution is the smoothest for most businesses? Our data shows – most companies choose to incorporate in neighboring Ireland or the Netherlands. 

Below, there are conclusive reasons why registering a business entity in one of these countries should be your obvious choice to deal with the aftermath of Brexit.

Ireland

Benefits of incorporating in Ireland?

  • EU Membership

People starting a company in Ireland will continue to profit from the efficiency of selling both within and outside the European Union. Also, Irish businesses will have no problem with the smooth flow of skilled labor.

  • Closeness to Great Britain

While the UK is likely to suffer after Brexit, it remains one of the world’s leading economies and one of the world’s most developed consumer markets, especially in the area of ​​e-commerce. Set up your business in Ireland and you get all the benefits of EU membership while remaining in close proximity to the 4th largest market in the world. Besides, Ireland will be the only country with a land border with the UK.

  • Excellent Business Reputation

Ireland is ranked the 8th best country to start a business in the world, according to the World Bank’s 2018 Doing Business report. It has also been the fastest-growing country in Europe since 2014 and has attracted over 700 US companies to date, bringing in over $300 billion in investment over that period.

  • Favorable Tax Climate

Ireland is also an extremely tax-friendly destination. The corporate tax rate of 12.5% ​​is one of the lowest in Europe, 6.5% lower than the UK and 2.5% less than Germany. If your entire business is conducted outside Ireland, you are also eligible for a full tax deduction on this foreign income. If you do business in Ireland, the country has 73 double taxation treaties, which prevents you from taxing most of your foreign income twice. As a result, Ireland is ranked 4th in the world in paying tax policies.

Do you want to learn more about incorporation in Ireland with Clevver’s support? Talk to our experts, or read more here.

The next most popular Brexit-proof destination? The Netherlands!

The Kingdom of the Netherlands obtains a leading position in the economic development of the EU. Running a business in the Netherlands is one of the most certain ways to overcome the negative effects of Brexit.

The Netherlands is at the forefront of economic development in the Eurozone. The country’s authorities strive to attract foreign investment and specialists capable of introducing innovative technologies in various spheres of production. The procedure for starting a new business in the Netherlands is easier than in other EU countries. Especially now, in a time of uncertainty (Brexit with or without a deal), registering your company in Holland is the most painless way to maintain a presence in the EU.

There are many opportunities for registering and developing small businesses. Moreover, if your company’s activities have a positive impact on the Dutch economy, you might qualify for government assistance at the start-up stage.

Benefits of incorporating a company in the Netherlands?

  • Membership of the EU, obviously

This provides lower costs due to the disappearance of border formalities and all kinds of specific national regulations, as well as the better functioning of the labor market, as companies can more easily attract suitable personnel from abroad.

  • The high business prestige of the Netherlands internationally

The Dutch GDP per capita is one of the highest in the world. And in contrast to other high-ranking countries, the income distribution is rather even. This means that a large part of the population has quite some money to spend which enables successful business making.

  • Business-enabling legislation

It’s easy to set up a business. The Netherlands ranks number 27 on the Ease of Doing Business Index, and setting up a company can be done through a public notary in just a few days.

  • The stable economic and political environment

This is mainly due to the very low level of unemployment and a boost from higher government spending.

  • The local taxation system is clear and transparent

A solid combination of the corporation tax rates in the Netherlands and financial incentives make the country a reliable choice as a base for international operations. The Dutch Tax Authorities have a flexible and practical approach, with a proactive attitude.

  • No double taxation

To prevent you from paying income tax on the same income in several countries, you can obtain tax relief in the Netherlands in order to avoid double taxation. The double tax relief only applies to the income tax.

Do you want to learn more about incorporation in the Netherlands with Clevver’s support? Talk to our experts, or read more here.

Clevver perks

From the practical, logistical, and financial points of view, setting up a company in Ireland or the Netherlands is difficult to beat.

How can Clevver help you? We now offer 10% off on the assistance with the incorporation in Ireland and the Netherlands

Send an inquiry now with a promo code BREXIT

Incorporation in the Netherlands

Incorporation in Ireland

or, email us at [email protected]

DISCLOSURE NOTICE: Any legal or tax advice in this communication (including any attachments) is for information purposes only and is not intended to be used, and cannot be used against Clevver or its Sender. The sender is neither an Accountant nor a Lawyer and cannot be made liable. Please, contact your tax accountant for individual consultation. Clevver does not provide any legal advice itself. Clevver works together with a network of lawyers and tax advisors that provide all necessary individual legal advice.


Prepared and Equipped: The 3 Most Important Business Trends for 2019

Psoted on: January 3, 2019 at 12:42 am, in

The beginning of the year is the best time to assess where the world will head in the following months. See our opinion on the most relevant topics for 2019 in relation to business, travel, and internationalization!

Brexit

Brexit is undeniably one of the most important recent events that, although maybe hardly categorized as a business trend, will definitely have an effect on all aspects of the UK and the EU. The early worries that accompanied the news of the United Kingdom leaving the European Union may have been overly cautious and negative, but there are surely some grey clouds and uncertainty looming over Britain. One of the strongest constituents of the Union will most probably not be part of it from March 2019, and that could hamper cooperation between the UK and the EU members and make working in the UK more difficult for EU citizens – and these are only the very first visible consequences. We advise everybody to make due preparations in order to suffer the least possible damage when it comes to private or business operations. Our two London locations will remain intact, so it may be recommended to get a real street address or a registered company address or to use our fully online company incorporation assistance to have your UK company set up before it’s not too late.

Digitization sprawling further

The scope of modern technology has been increasing so quickly that its influence on our life gets more unbelievable every week. Some say that the online giants Facebook, Google, and Amazon are working on their own payment system, thus robbing banks of their previous role and reputation, others envision such a precise AI already in 2019 that will drastically change how we regulate privacy, identity, relationships and other aspects of our life in general. All this, of course, raises questions of security that may be strengthened with the ever-evolving blockchain technology. This provides one of the few safe ways to protect information that is increasingly lesser stored on surfaces and places to which a computer doesn’t have access. While all these concerns may seem a bit distant now, just remember how many things you can do with only a small device in your pocket, and you may realize how close the future is. If you’re doing business but would like to protect your personal contact data, you may as well opt for a virtual address or a foreign phone number where your clients and customers can reach you without knowing your private contact details.

The transformation of the modern workplace

If you’re reading these lines while sitting in front of a computer in an office, then you may belong to the generation whose position, field, or workplace has not adapted to the flexibility that the modern age provides. Of course, a shift towards untraditional working environments is not a must but a door that is being open increasingly wider. Since the majority of the processes are carried out on a PC or laptop and since most of the communication is done online or via the phone, there are fewer and fewer white-collar jobs that could not be performed with 90-95% efficiency from anywhere around the world. This will have a serious effect on mass transportation, employer attitude, and HR strategies, and it will also increase your chances of being active and adventurous at the same time. Even if you’re not in such a field currently, you can take tons of online courses to be a UX/UI designer, a programmer, or whatever area provides an increased amount of physical freedom. And by having a fixed address on basically every inhabited continent of your choice, you will be able to manage your official negotiations from yours.

The Times They Are A-Changin’

It would be early to precisely predict what will happen in the next 12 months, but some of the fields where in 2019 the biggest changes will bring were touched upon here. Whether we want it or not, these are all currents whose first waves have already reached us, and the stronger tides are still yet to come. So, let’s be prepared and equipped for all possible scenarios so that we can all hope for a smooth and easy year ahead of us.

DISCLOSURE NOTICE: Any legal or tax advice in this communication (including any attachments) is for information purposes only and is not intended to be used, and cannot be used against Clevver or its Sender. The sender is neither an Accountant nor a Lawyer and cannot be made liable. Please, contact your tax accountant for individual consultation. Clevver does not provide any legal advice itself. Clevver works together with a network of lawyers and tax advisors that provide all necessary individual legal advice.