VAT | 7. July 2020

Cross-border E-Commerce in Europe withstands COVID-19

After insecure consumers and logistical problems initially led to a decline in revenues, cross-border online trade is picking up again. The crisis has shown that digital renewal and international networking are necessary in order to benefit from the growth potential. by

In addition to the changed purchasing behaviour of their customers, logistical challenges hit European online trade at the beginning of the Corona crisis in February and March: airlines were no longer able to serve their transport routes as usual. Retailers in heavily affected regions such as Italy and France experienced the temporary closure of distribution centers. In addition, controls and long truck queues at border crossings hampered goods traffic throughout Europe. From April onwards, however, cross-border online purchases picked up noticeably. In May, only a few countries reported obstacles to cross-border trade. Mail order companies adapted their operations to the rising demand for some products and the new conditions.

Taking a closer look at individual industries, one will find great differences. Fashion and travel were among the losers, while food sales boomed. Compared to March, however, the new survey by E-Commerce Europe shows that online trade in Europe as a whole has recovered slightly in recent months and fewer interviewees expect a decline in sales (73% in March, 39% in May).

Digital development and transnational cooperation

The COVID 19 pandemic has further increased the importance of e-commerce for consumers. The WTO has prepared an information note on “E-commerce during the pandemic”, in which the potential of increased international cooperation and simplified exchange of goods is to be highlighted in the future. Thus, small and medium-sized enterprises (SMEs) benefit from facilitations in the cross-border trade of goods and services and can take advantage of additional growth opportunities. According to the WTO, this requires reducing the digital divide and creating a level playing field for SMEs. The WTO underlines the need for efficient and affordable applications in the field of information and communication technology (ICT), such as new technologies to simplify procedures for companies:

„The pandemic has highlighted the crucial importance of the digital economy and the urgent need to bridge the digital divide both within and across countries.“

Regarding the European market, different national VAT rates, tax exemptions or the application of the destination country principle in particular pose major challenges for online traders. ClearVAT’s software solutions enable merchants to sell their goods within Europe in compliance with the law (without unknowingly reducing taxes) and without registration (without having to register with tax authorities abroad). This way, they create the conditions for rapid expansion and sustainable growth.

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