E-commerce as part of the Digital Single Market Strategy for Europe

Navigating a complex regulatory landscape

Globalisation, i.e. the unrestricted geographic reach of goods and services, has created immense opportunities for companies engaged in trade and services. However, this also means that companies must keep up with legislative changes and restructure their activities as needed. The coronavirus pandemic has further accelerated this process.

According to experts at PwC Hungary and Réti, Várszegi & Partners Law Firm PwC Legal, increasing and in many cases unclear regulation imposes a significant burden on market players. By sharing our extensive tax and legal expertise, we are ready to help companies that operate e-commerce platforms.

What is a Digital Single Market?

In 2015, the European Commission adopted a Digital Single Market Strategy for Europe with the aim of creating a connected digital single market across Europe.

This includes:

establishing common European data protection rules;
reforming telecoms rules; and
copyright rules.

Steps have also been taken towards modernising consumer protection rules for online and digital purchases, facilitating access to digital goods and digital content, and tax harmonisation.

Areas of regulation affected

The Strategy is also about defining an appropriate e-commerce framework and preventing unfair discrimination against consumers and businesses when they try to access content or buy goods and services online within the EU.

This objective has triggered a wave of legislation in the following areas:

consumer protection rules;
preventing unjustified geo-blocking;
establishing a European copyright framework;
changes to tax rules;
competition law;
legal guarantee terms; and
data protection rules for digital services and the handling of personal data.

The rules for e-government services (including e-invoicing and e-archiving) have also been the subject of legislative reform.

The new VAT e-commerce rules will affect almost all e-commerce businesses. Within the framework of the Digital Single Market, the VAT e-commerce package was proposed in multiple stages from 2015 onwards. The next package of measures, adopted in 2017 and 2019, was set to apply from 1 January 2021. However, due to the coronavirus pandemic, the application of the new VAT e-commerce rules has been postponed by six months. Thus, the rules will apply as of 1 July 2021.

In addition to a significant revamping of the system of VAT returns, payments and refunds, the new rules will focus on businesses operating electronic interfaces such as marketplaces or platforms.

Who is affected by these rules?

All e-commerce businesses that supply goods or services online are affected. This includes businesses that

run a web shop,
operate as a platform (online marketplace),
maintain commercial relations with companies inside or outside the EU,
supply goods or services to EU as well as non-EU customers, or
provide services to platforms and online retailers.

Our e-commerce services

If your company is engaged in e-commerce, PwC Hungary’s tax advisors and the legal experts at Réti, Várszegi & Partners can assist you with the following:

Advice on the VAT treatment of transactions, and VAT-related matters concerning product returns
Advice on the tax obligations of online platforms and marketplaces, identifying the invoicing rules for transactions
Preparing ruling requests, negotiating with the tax authority and the Ministry of Finance

Advice on registering for the One-Stop Shop (OSS)/Import One-Stop Shop (IOSS)
Representation before the tax authority during registration

Legal services

Preparing and reviewing supplier contracts
Drafting general terms of business and privacy notices for web shops
Reviewing business conduct (B2B) to identify unsound commercial practices
Advice on legal matters related to IT and intellectual property rights

Ensuring compliance with e-commerce legislation, including consumer protection, competition law and contract law
Competition law consulting, including examining strategic partnerships, pricing practices and algorithms
Advice on marketing materials and marketing compliance, with the assistance of an advertising psychology and behavioural sciences expert if required
Preparing compliance policies on consumer protection and competition law, providing training for employees and company managers, with the assistance of a forensic expert if required

Representation before the authorities and courts
Representation before dispute settlement (conciliation) panels and self-regulatory bodies

Advisory services

Developing an omnichannel strategy that harmonises sales channels
Defining the data asset strategy that takes into account internal and external data sources as well as data analytics capabilities
Establishing an e-commerce platform concept
Defining the relevant playing fields, strategic goals and the actions required for execution
Analyzing customers' needs, pain points, behaviours and opinions (e.g. using online questionnaires and social media analysis)
Analyzing customers' current journey through the critical transaction steps and recommending improvements (e.g. registration, purchase, payment)
Giving advice about the effects of different payment solutions and regulatory changes (eg. PSD2, AFR) and their potential business opportunities

Supporting the effective monetization of available data (e.g. transaction and customer data)
Performing data-based customer and segment analysis
Recommending ways to decrease customer churn and increase customer conversion
Developing dynamic pricing models for different products and services
Performing data-based supplier screenings and risk assessments

Providing support in optimising the logistics network architecture and logistics operations
Recommending ways to establish an effective transportation concept and daily carriage planning
Designing effective stock handling, warehousing and fulfillment processes from stock management to handling returned goods
Developing a customer service plan and designing effective multichannel

Supporting the selection of the proper e-commerce platform (e.g. Opensource, SaaS, Caas) and the right supplier
Supporting the design and implementation of IT systems underpinning e-commerce (e.g. selection of solution and supplier, RfP management, IT development)
Managing the quality assurance of the system's implementation