What neither the European Commission nor other institutions can currently demonstrate, the Berlin start-up eClear AG (formerly ClearVAT AG) has now officially launched its EU VAT engine. Eight thousand large e-commerce dealers from all over Europe are connected to the start. Within the next twelve months, eClear intends to provide technical integration to another 300,000 merchants. “eClear is a unique infrastructure project for the fully automated calculation, collection, and payment of VAT in cross-border e-commerce trade in the EU,” says founder Roman Koidl. “It’s hard to believe, but not even a complete list of tax rates and exemptions existed in the EU, not to mention the possibility of paying the taxes owed centrally at one point,” adds Peer Steinbrück.
More than 550,000 tax rate applications for millions of products
The VAT engine is a database that provides manufacturers and distributors in the European Union with continuously updated tax rates. With 27 member states, it can’t be that much! — Far from it: “Each EU country decides which VAT rate applies to which product. Reduced rates are added to the standard rates. There are thousands of exceptions, reductions, exemptions and special regulations,” says Koidl. There are also regional peculiarities and regulations. Just think of the Canary Islands, Heligoland, Monaco, San Marino, the Azores, or even the French overseas territories. With all special regulations and exceptions, eClear’s unique database contains more than 550,000 certified tax rate applications for millions of products, the so-called tax codes. The highlight: a network of VAT specialists in all EU member states immediately records every legal change in a certified update process. For Peer Steinbrück, “a simple, practical, and fair solution that provides traders with legal certainty but opens the EU market to traders in the first place”.
Strong cooperation partners: SAP, Deloitte, BDO
With their international offices, the tax consulting firms Deloitte and AWB supported the development. BDO and SAP are partners in certification and technology. To handle billions of transactions, eClear relies on the in-memory database SAP HANA and SAP S/4HANA, the latest generation of SAP business software. “On the way to a new reality, it is clear that flexibility is the be-all and end-all in any industry. eClear must handle high volumes and be available quickly at the merchant’s checkout. Intelligent technologies from SAP and the expert knowledge of partners such as Uniorg help here,” says Christian Mehrtens, Head of Partner and SME sales and member of the management board of SAP Germany.
“The temporary reduction in value-added tax in Germany has shown how much effort retailers are confronted with, even if it is only a matter of national VAT law. Suppose you want to ensure the long-term success of your company in the European market. In that case, you have to strive for both audit-proof and economically sensible solutions for intra-community trade,” adds Stephanie Alzuhn, Partner at the auditing and consulting firm Deloitte in Berlin.
Access to the European Single Market
Not only, but the different VAT rates also pose a challenge for retailers. Administrative efforts such as registration in destination countries, required declarations or even communication with local tax authorities result in time and cost expenditures or even thwart expansion plans. A considerable share of the 20 billion euros in taxes that the EU Commission estimates are reduced each year in online trading is due to the complexity of the requirements. eClear counters this with its automated sales tax clearing: a registration-free alternative for B2C goods delivery within the EU states. Merchants install a small software in their stores. The VAT applicable in the destination country is then calculated correctly, and the sales are also reported to the respective tax authorities. The taxes are paid directly by eClear. Roman Maria Koidl: “Our full-service approach frees merchants from tax obligations and, above all, from the numerous liability risks abroad, such as a local tax audit”.
The database in the online-based e-commerce ERP system plentymarkets is celebrating its premiere. Thanks to full integration, the sales tax solutions are now available to the affiliated dealers, thus opening up a single European market. “The proportion of cross-border goods shipments from plentymarkets dealers in Europe continues to rise significantly. With eClear AG, we have gained a strategic partner who can offer our customers a unique solution from a tax perspective,” explains Jan Griesel, founder and CEO of plentysystems AG.