International expansion holds many fantastic opportunities for eCommerce businesses. Access to new and growing markets could even prove vital to your store’s continued growth. There are, however, many legal pitfalls associated with selling internationally. You don’t want to fall foul of customs law, and you definitely need to be on top of international VAT regulations.
eCommerce law is definitely not the most glamorous part of going international (something which is otherwise an exciting time for your eCommerce store!). That’s why we’ve put together these 5 vital eCommerce laws that could shape your international expansion.
Anyone already running an eCommerce business domestically will be familiar with data protection law and how to comply with it. But there are also data protection laws specific to international selling. For example, you need to be very cautious about sending data to countries outside of the European Economic Area. Always remain in control of where the data in your possession is sent and be cautious of transferring any of your customer data to another country.
You also have a responsibility to ensure that any country you send customer data to also has stringent data protection law that will keep your customer data secure. If you’re only selling within the EEA, just make sure that you comply with standard data protection law. Something you should, of course, already be doing.
Possibly one of the most complex and frustrating aspects of selling internationally, VAT regulation varies from country to country, so it’s important to research how VAT should be charged on your products.
Usually, you won’t be required to charge VAT at all when selling outside of the EU, so bear that in mind when adjusting your store for international selling. You’ll want to make sure that non-EU customers aren’t displayed prices with VAT included.
When selling to customers within the EU, things are a little different. EU VAT law starts off pretty simple. You usually need to charge the same level of VAT as you would to UK customers. This makes things simpler from a user experience point of view, as you won’t have to adjust pricing and taxes depending on country.
However, things get more complicated as your sales volume increases. EU nations have sales thresholds, above which, you’ll need to register to pay VAT in that country. There are also different rules for selling digital goods, so if your eCommerce store falls into this category, you’ll need to be aware.
Of course, if you’re a UK retailer, things are bound to get even more complicated over the next few years as selling within the EU becomes a grey area the current climate!
When selling internationally, you need to keep all documentation related to each exported order. This could include things like customer correspondence, packing notes and proof of postage. You need to keep all documentation for reference and to assist you if there are any issues with exporting your orders.
As well as being law, it’s always good practice to keep this documentation anyway. Keeping your proof of export documents is particularly important if you’re selling to customers based outside of the EU. You need to make sure that you are legally covered, should there be any issues.
Customs law can vary a lot depending on where you are going to be selling. You may have to apply for an export licence or pay duties depending on the country and the volume of goods you are selling.
Duties can be very complicated and can vary depending on the type of goods you are selling. Certain goods demand higher duties and some may be banned from a country all together. Within the EU, you won’t have to pay any import duties, but make sure that you thoroughly research anywhere else you’d like to sell.
Customs issues can be incredibly costly and damaging to your expanding eCommerce store. Be sure to make yourself aware of any customs rules, duties and taxes that apply to the products you’re selling.
Finally, there is certain information that you must legally provide to customers shopping on your eCommerce store. These apply not just internationally, but domestically as well. You should be making a note of the information that applies, particularly to international customers. For example, you are required to make language options clear for your visitors.
You also need to make pricing and delivery information clear and transparent. Think about the different VAT rules as mentioned earlier and make sure they are clearly visible on your store. You should also make customers aware of any duties that may need to be paid on their delivery costs.
Providing clear information to your international customers is essential both for legal reasons, and for usability. You want your international customers to have the same smooth experience that your domestic customers enjoy.
There’s a huge amount to think about when it comes to international eCommerce law. Make sure that you research comprehensively the laws that relate to your products and the countries you wish to sell in. You may want to start out by selling in simpler markets like the EU and expand to more complex areas later on.
You don’t have to manage international expansion by yourself, there are some great resources like Open to Export from UK Trade & Investment that will help get you started.
Once you do get going, you’ll be ready to benefit from the rich and varied markets available to international eCommerce stores.