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.


Set up a Business in Cyprus

Psoted on: April 16, 2021 at 9:21 am, in

-REMOTELY WITH CLEVVER’S SUPPORT-

Overview:

  • Cyprus is a full member of the European Union which provides for the possibility of cooperation with any European business partners on beneficial conditions; 
  • The country has one of the lowest corporate tax rates in Europe — only 12.5% on net profit;
  • The jurisdiction of Cyprus has signed a large number of double taxation treaties, more than 50 with other countries; 
  • Cyprus is one of the most profitable EU jurisdictions for ICOs, thanks to its legal framework and flexible tax laws; 
  • There are no exchange controls in Cyprus; 
  • Clevver offers support for the remote company registration in Cyprus. All documentation on incorporation is available in digital format.

The Republic of Cyprus, an island member state of the European Union, is located at the eastern end of the Mediterranean Sea. It has an open market economy with positive growth dynamics dominated by the services sector, mainly including financial services, tourism, and real estate. 

Cyprus is one of the most popular places in Europe for company registration. The combination of favorable tax laws, simple corporate legislation, and the country’s stable tax policies has resulted in Cyprus becoming an attractive jurisdiction where thousands of new companies are incorporated every year, making the country a significant international market player. 

Cyprus has an efficient and well-developed legal system and, as a former British colony, is a common law country with business legislation similar to that of the United Kingdom. Since Cyprus is a member of the European Union, a company registered in the country enjoys all the benefits of operating in the EU. 

For all entrepreneurs who have firmly decided to form a company in Cyprus, Clevver offers professional assistance in remote LTD company registration in this promising jurisdiction. Upon request, our experts can also provide many additional services. To find out more, click here

Taxation in Cyprus 

  • The income tax rate (corporation tax) is 12.5%. Income tax is withheld from resident companies on profits from any commercial activity, whether derived from sources within or outside Cyprus. Non-resident companies are subject to income tax on income, the source of which is Cyprus. Income from securities transactions, dividends, and interest from non-core activities is not subject to income tax. 
  • Defense Tax (Special Contribution for the Defense) – from 3% to 30%. It is payable only by tax residents of Cyprus. Interest income earned by a Cypriot company in the course of non-core activities, such as the rental of real estate, is subject to defense tax at the rate of – 30%. 
  • Annual Levy. It is mandatory for all companies (even those not operating) from the first year of registration and is 350 Euros. Payment must be made by June 30 of each year. 
  • Capital Gains Tax – 20%.  
  • VAT (Value Added Tax). The standard rate is 19%, a reduced rate is 9% and 5%. If the company exports goods, the rate is 0%. It depends on the type of activity of the company. 

Benefits of Incorporating in Cyprus 

  1. Cyprus is on the “white list” of the OECD, which includes countries that have implemented international tax standards; 
  2. Dividends are not taxed in this jurisdiction; 
  3. Cyprus has a particularly favorable tax climate for companies whose activities are related to intellectual property (IP). Of the 100% of profits derived from IP, only 20% are taxable, the remaining 80% are tax-free; 
  4. Cyprus is strategically positioned between the emerging markets of the Far East and Africa and the developed economies of Western Europe; 
  5. The country has well-developed communication and transportation infrastructure; 
  6. Cyprus has a sound legal system based on English law; 
  7. The jurisdiction is one of the most profitable EU jurisdictions for ICOs, thanks to its legal framework and flexible tax laws; 
  8. Cyprus has signed DTAs with more than 50 countries, including the United Kingdom, the United States, China, Russia, India, Germany, France, Switzerland, South Africa, Singapore, etc. 

Remote Company Registration 

Company registration in Cyprus with Clevver hand is a step-by-step and clearly structured procedure. We are professionals and everyone who turns to us for help can be confident in the highest quality of services provided and the best timing of the task. Formation of your company in Cyprus does not require personal presence, Clevver experts will do everything remotely and provide the necessary documentation in digital access. 

APPLY TO US TO RECEIVE: 

  • The assistance of the specialists of the highest level;  
  • The remote support from Clevver;  
  • A comprehensive package of documents on the company formation that can be assessed digitally;  
  • Possibility to receive many extra to business incorporation services in Cyprus (registered address, mail-handling service, a local phone number, and many more);
  • Quick processing for the business incorporation service;  
  • Consistent customer support and individual approach to each client. 

Bottom Line 

Cyprus is an attractive place to do business. One of the decisive factors that have played a role in this is Cyprus’ business-friendly tax system, which offers many advantages to companies located in the country. 

With Clevver’s assistance, an established company in Cyprus will start working faster and become an effective tool for international business. Contact us today!

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.