by
Martin Banks
Last year the European Commission presented an ambitious strategy to create a Digital Single Market (DSM). Commission Vice-President Andrus Ansip, who is in charge of the strategy, invited mid-July journalists to discuss with him the progress made to date. E-commerce is one of the key-areas of DSM, European Business Review was present in the meeting for some questioning.
EBR: Parcel delivery is a lifeline of e-commerce. How will the Commission ensure proper enforcement of the Parcel Delivery Regulation in Member States and ensure that National Competition Authorities will follow-up with national operators?
VP Ansip: A regulation is directly binding on all Member States; it is concrete and specific, and helps avoid further regulatory fragmentation. The creation of the EU price webpage and affordability assessments must all happen to the strict timetable that is set out in the Regulation. It also requires EU countries to establish penalties for infringements of the Regulation and to take all necessary steps to ensure the Regulation is implemented. If necessary, the EU Treaties provide for legal instruments allowing the Commission to ensure compliance with the obligations.
In 2019, and every four years thereafter, the Commission will submit an evaluation report on the application of the Regulation to the European Parliament and the Council.
National Regulatory Authorities (NRAs) will be responsible for collecting the prices of certain services from universal service providers and assessing their affordability. They will also be responsible for collecting basic information about the activities of all parcel delivery service providers, such as the names and addresses of the providers; the services that they offer and conditions of sale, including complaints procedures; annual turnover for parcel delivery services and number of items delivered; and the number of employees.
EBR: Regarding VAT, will the Commission take into account the issue of thresholds in the Member States in its new legislative initiative due to be published this autumn? Currently, to apply to VAT in a country, an online merchant needs to reach a certain threshold. However, when the online merchant reaches the threshold and thus register to VAT in the country, it will have to pay the VAT for the whole year (including when it was not reaching the threshold yet) with interests. How to solve this issue which is currently burdensome for companies, and particularly SMEs?
VP Ansip: Compliance with VAT obligations is a particular concern for SMEs, especially in the cross-border context. The importance of avoiding burden on small business with additional tax obligations is reflected in the proposal which contains well-balanced provisions as regards VAT compliance. The proposal specifically exempts from the non-discrimination requirements those traders that fall under a national exemption VAT threshold from the need to register in order to account for VAT of other Member States in order to sell electronically provided services. This is provided in order to ensure that these companies – subject to the existing national rules - are not obliged to pay for VAT due to EU rules, neither in the Member State where they are located, nor in those to which they provide their services cross-border.
EBR: Allow me a last question about geo-blocking. When a consumer enters a shop in another EU country, the owner does not ask for the consumer’s ID in order to accept a purchase or to adjust the price or conditions. But in the online world, often consumers are blocked from accessing offers in other countries for example by re-routing the consumer back to a country-specific website, or asking to pay with a debit or credit card from a certain country. How does the Commission solve this kind of discrimination?
VP Ansip: The Commission has proposed in May legislation to ensure that consumers seeking to buy products and services in another EU country, be it online or in person, are not discriminated against in terms of access to prices, sales or payment conditions, unless this is objectively justified for reasons such as VAT or certain public interest legal provisions.
The proposed Regulation aims to provide more opportunities to customers: it addresses the problem of customers not being able to buy products and services from traders located in a different Member State, or being discriminated in accessing the best prices or sales conditions compared to nationals or residents.
Consumers and businesses – especially SMEs – show an increasing interest in shopping across the EU and online sales of products are growing by 22% per year. While the principle of non-discrimination is already established under the Services Directive and the Commission has applied it in services sectors such as car rental companies or amusement parks, companies and consumers alike will benefit from more legal certainty about which practices are allowed and which ones are not.
To avoid introducing disproportionate burden on companies, the proposed Regulation did not impose an obligation to deliver across the EU and exempts small businesses that fall under a national VAT threshold from certain provisions. The proposed Regulation provides this legal certainty and enforceability for products and services online or offline. The proposed Regulation is a powerful discouragement to traders intending to discriminate.
EBR: Thank you Mr. Vice-President.
By: N. Peter Kramer
