EU to unveil Digital Single Market today
The EU are set to announce their “Digital Single Market Strategy” today, and it will affect every single online retailer in the EU as well as every consumer.
Update: Digital Single Market Strategy website is now live
Some suppliers of digital goods (e.g. Sky, Netflix, Amazon Prime) are already up in arms as it will stipulate that their services should be available across the whole of the EU. They’ll no longer be able to lock you out of a contract simply because you don’t live in the UK. One implication of this could be for the BBC, who currently on their iPlayer service don’t let you view it if you’re not using a UK IP address, could the BBC be forced to make their content available to every EU citizen for free, even though they don’t pay a licence fee?
How it will impact your business
However you’re probably going to be more interested in how it will affect your business. First off, watch out for the EU to propose “Complementing the Consumer Rights Directive”, “Migration to Single European Payment & eInvoicing”, and “VAT reform” – aligning tax rates for digital content and similar physical goods. We’ve already seen the VAT rates for digital goods kick in on the 1st of January this year, but the EU wants to extend this to physical goods in the future.
EU to mandate cheaper parcel deliveries
The EU also want a single European delivery network and have proposed a road map to streamline postal delivery. Somehow they’re aiming to make parcel deliveries cheaper, although quite how the carriers will view this is open to question, seeing as the cost of delivering to say Italy is way more than a parcel going from Reading to Milton Keynes!
Illegal to refuse to sell overseas
Potentially the most worrying aspect of the EU policy is for sellers who don’t wish to ship overseas. It’s been rumoured that as part of the EU’s strategy it could become illegal to block a buyer within the EU from purchasing from you. For some sellers who are too small to have a contract with a regular courier, or who simply doesn’t want to fill out 28 different VAT returns each quarter, this could become a barrier to business rather than an incentive.
While we’re talking VAT, don’t forget that the Mini One Stop Shop (MOSS) VAT system requires all sellers to register for VAT and submit a VAT return each quarter, even if they’re below the VAT threshold in the UK. Whilst at the moment this only applies to digital sales, as soon as the EU extend this to physical goods a brand new online seller starting a business today could in the future be forced to register for VAT and ship their first sale to the far flung corners of the EU. Not only that but potentially they could be sued in any one of the EU countries for refusing that same sale.
What’s the point of more meddling in your business?
I’m guessing our UK readers buy their gas and electric, house and motor insurance from a UK company (or at least a company nominally based within the UK) and bank with a British bank. Most EU citizens also purchase online almost exclusively from companies based in their own country. It’s not a stunning success for the EU who have extolled the benefits of borderless trade which while it exists is still in it’s infancy.
Of course the aims of the EU’s Digital Single Market Strategy are admirable. They want to make it easier for you to sell to any EU consumer and fix the EU’s biggest failure i.e. the single market simply isn’t doing much for consumers. The problem is that we’ve seen from VAT MOSS that their meddling in the affairs of online sellers doesn’t always produce the trouble free easy growth that they promise.