Dear EU – there will be no European Single Market this way

16.10.2014 | Blog, General

The european union propagandises the European Single Market as one of its main goals and gloats itself to be the guardian of a free market and to enable all companies to sell their respective products and services borderless within the european union. Starting January, 1st 2015 there now are new regulations for VAT within the EU. In a nutshell: All dealers within the EU who are selling electronic products or services (not physical products!) to private customers within the EU will have to calculate the VAT of the destination country and to discharge the VAT to the respective countries.

To put it exaggeratedly: If you wanna sell your electronich products within the EU you will have to take care about 28(!) different VAT systems and you are required to keep yourself and your calculations up to date. Congratulations – you just bought yourself some meters of new VAT related literature in addition. To make it worse: Some ERP systems are not prepared for this and most ecommerce platforms are neither. Dear EU – there will be no European Single Market this way!

The fig leaf of the german implementation is that you may have one single contact for the sales tax summary report which is additionally required. Unfortunately this does not prevent the dealer to keep himself up to date about 28 different sales tax systems – a job that will be too much for smaller companies. By the way: apparently regulations will be regular subject to change in most countries.

In my eyes this tramples the idea of a European Single Market with both feet and without need. Companies who want to sell their products abroad will have to rethink their sales model. Most easy: One will not sell to private customers within the EU but still outside EU. What a bad joke for EU citizens. Alternatively we step back in former times, box download products to still sell them within the sales tax system of the dealers home country – which induces shipping cost for EU citizens (but not for swiss customers or other customers outside the EU) – a disadvantage for EU citizens as well. A third alternative may be to donate products for private customers in the EU – if one can afford so. This will only lead other groups of customers feeling to have his leg pulled.

We as a manufacturer of mail encryption product will have to rethink our business model. What ever we decide, there will be enough people who will not understand why we decided the way we will do – and we do not wanna harass our customers but do want to still offer gpg4o for private customers in the so called “European Single Market” of regulations.

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