Geo-blocking is when customers are prevented from accessing a provider’s website from another EU country or purchasing their goods under the same general terms and conditions as national customers. For example, the customer’s current location can be determined if the website collects the IP address. The online merchant now knows from which country the customer wants to access the site and can redirect him to a country-specific shop. This makes it possible to display a different assortment or mark an article as unavailable.
The Geo-blocking Regulation (EU) 2018/302, which came into force on December 3, 2018, put an end to these practices for EU countries as well as Iceland, Norway, and Liechtenstein. It aims to give EU citizens better access to online goods and services and provide legal certainty for entrepreneurs. The geo-blocking regulation is part of the EU strategy to strengthen the digital single market.
In Germany, the Federal Network Agency is monitoring the implementation of the regulation. In February 2020, it drew an interim conclusion after the first months of the new legislation. Around 100 complaints were received, half of which concerned sales of goods such as electrical appliances, clothing, and e-books. Two-thirds of the justified complaints were resolved with the suppliers, and a solution was found without further action. Otherwise, the Federal Network Agency can impose fines of up to 300,000 euros.
However, online retailers in the EU can still define for themselves to which countries they deliver their products. Many consumers see this as a disadvantage because although they can purchase the goods under the same general terms and conditions as national customers, the retailer may still need to offer delivery to the desired country. For many retailers, VAT is a significant hurdle in cross-border e-commerce: The applicable tax rates must be known, and the gross sales price must be correctly calculated and displayed in the shop. In addition, VAT registration in the destination country and tax payments to the national authorities are also necessary. The EU plans to simplify taxation in Europe further. A proposal from the Commission is to be presented by 2022.
ClearVAT helps online traders to sell their goods in all EU countries in a legally compliant manner. ClearVAT assumes the assignment of national tax rates and exemptions to the articles purchased online, as well as tax collection and reporting to the local tax authorities, without the trader registering in the delivery country. This provides fast access to the European Single Market.