This article is provided by Ecommerce Europe’s Associative Partner – emapct
In July 2021, EU authorities began to enforce ‘The eCommerce Package Regulation’ to recap lost VAT on cross-border e-commerce sales. This means that all cross-border online businesses are now liable for VAT and need to register for IOSS/ OSS/ VAT in Europe, report files, and pay VAT on sales to private consumers in the member states where their deliveries take place.
Notwithstanding, additional VAT registration is mandatory in every EU member state where stock is being managed and local fulfillment services are being consumed. Given the explosive growth of eCommerce, the new regulation is crucial in preventing tax fraud and protecting the local EU market.
Local businesses and corporations that possess the infrastructure to adapt to this new reality will move forward with ease, however, the challenges facing cross-border small to medium-sized businesses are already proving troublesome. With limited resources and different VAT rules in 27 EU member states, SMBs are struggling to meet these hefty requirements.
Today’s rules require businesses to register VAT in every country they are storing inventory, even before a final sale has taken place. The average VAT registration process takes over 13 documents to begin, 100 days to receive a VAT number, and still requires over 60 VAT and statistical filings per year.
Those unable to adapt or simply have not changed their practices following the new regulation are now facing the consequences of their new reality in the form of delayed packages at customs and unexpected VAT charges when shipments arrive at the destination country. For logistics companies themselves, it has resulted in a high number of shipments not being claimed or even returned.
The reporting mechanism of IOSS and OSS certainly has helped minimize these efforts for small businesses to enterprises, but the challenge to maintain compliance should not be underestimated.
Maintaining a successful cross-border eCommerce business, where remote management is involved, is a significant achievement for any entrepreneur. Every business faces a plethora of challenges, regardless of size.
SMEs on average are spending €4.500 for each VAT registration application plus €6.000, per country, per year, in compliance costs merely to engage in cross-border trade. For larger businesses, the expenses are even more significant.
Empact was founded to solve these issues. Nearly four years ago, the Dutch-based TaxTech company recognized the value of helping small companies with the new legislation.
With the clear purpose of wanting to help reduce tax fraud for international resellers, empact was created to not only help but encourage sellers to comply with the new tax regime. empact offers an instant SaaS technology platform as a one-stop shop for all VAT compliance shops in 27 EU member states and the UK market through a real-time transparent tool that combines technology with an out-of-the-box approach, empact offers the ability to automate the entire reporting and filing process, helping sellers remain compliant while reducing the human resources required to do so. The platform provides its users with their own VAT number, taking the burden of this new legislation off sellers while providing an applicable threshold of 10,000 euros per seller for sales up to 150 euros each.
An end-to-end VAT SaaS platform, Empact utilizes real-time logistics, monitored 24/7 for a full cycle compliance tool that safeguards E-Sellers by eliminating all VAT exposure and allowing them to focus on their core business. Supply chains are dynamic, commonly resulting in hefty fines and penalties for improper VAT reporting, with integrated shipping monitoring and the consideration of tax rules in real-time, Empact is the only platform able to mitigate the issue in its entirety. Creating an environment where the costs are known, controlled, and compatible with proposed budgets, compared to other traditional alternatives, Empact increases the availability of time & money that can be repurposed more efficiently and invested in business growth.
Utilizing a special license granted by EU authorities themselves, Empact is able to eliminate all VAT exposure with a representative platform for all VAT compliance issues merchants, marketplaces, and supply chain service providers face. This feat is accomplished with a smart cloud-based multi-integrational software that seamlessly integrates with any platform and/or marketplace.
Merely requiring a 5-minute registration, Empact’s platform is able to make you fully compliant by monitoring every transaction and movement whether B2C or B2B for local, domestic, sale, or stock movements across 27 EU member states and the UK market. With 24/7 real-time monitoring, every movement is accurately assigned to the relevant tax report with the required VAT calculation according to each product’s category and state.
Eliminating the need for costly, never-ending VAT registration procedures based on its granted license, Empact takes care of the daily requirements of monitoring, reporting, and filing needed VAT payments without the need to send them to tax experts in all required states.
An automated platform that provides better control over time, cost, and risk, Empact guarantees all processes are executed correctly and in a timely fashion ensuring the avoidance of penalties and issues that ultimately affect the bottom line.
With an efficient one-stop-shop solution, merchants, logistics, and supply chain service providers can now access the broader coverage they seek along with a plethora of benefits that were previously unavailable to them.
These benefits include the ability to:
- Immediately received a VAT Number
- Instantly import and sell in 27 EU states and the UK market
- Manage local stock in Europe and reduce shipping costs
- Increase conversion rates
- Increases regional footprint in the EU and UK markets.
- Increases Positive Cashflow
- Increase net profit by more than 20%
Empact is an Associative Partner PLUS of Ecommerce Europe. Empact is the solution businesses and SaaS companies require to ensure they are aligned and compliant with all current and upcoming changes in the growing eCommerce landscape. With a special license from EU authorities that is able to grant its users 0% VAT on the importation of stocks while guaranteeing VAT is being paid only upon sale. A pioneer in the industry, Empact is the only fully compliant, real-time platform made for any eCommerce business interested in working within the EU and UK today.
About Ecommerce Europe’s Associative Partnership PLUS
Be becoming an Associative Partner PLUS, e-commerce-related NGOs, (inter)national associations or business organisations/groups can participate in Ecommerce Europe’s lobbying and advocacy efforts and get fundamental insight on EU legislation impacting e-commerce. For more information, please visit Ecommerce Europe’s website.