Serious changes are coming into the E.U. VAT
As I write this in mid-December, there's absolutely not any Brexit trade arrangement between the U.K. and the E.U. Firms in the U.K. have no clue what is going to happen on January 1, when the U.K. formally exits in the E.U. [Editor's note: An hour after we published this guide, E.U. and U.K. officials declared a Brexit agreement.]
Surely importers and exporters will experience headaches. Manufacturers could have hiccups in obtaining raw materials, which might cause price volatility.
But, it's less of a problem than it appears for ecommerce retailers. The cost of the goods may vary. But so long as they fix their selling prices to match the cost, most U.K. retailers will continue.
Let’s see our product:
Value-added tax
The actual issue for U.K. merchants will be adapting to changes in the E.U.'s value-added tax. The changes -- that apply to non-E.U. companies that sell to E.U.-based customers -- were initially to commence on January 1, 2021. The E.U. has postponed them to July 1. Presumably U.K. companies will be out of the E.U. then and will apply the very same principles as firms from the U.S. and elsewhere.
Essentially, the changes apply to companies that sell more than $10,000 of products annually to E.U. consumers. This is approximately $10,000 at current exchange rates. The exemption to products under $22 is moving away. All products must have a VAT charge come July 1.
For orders under $150, this fee can be levied by customs or the postal couriers rather than collected by the merchant at the point of sale. This would indicate a surcharge applies to the merchant as the sender of the merchandise or the customer as receiver. Neither is appealing.
The quantity of VAT depends upon the speed of the destination country. There are 27 countries in the E.U. and 27 VAT prices. Moreover, VAT-eligible products vary among nations.
But a non-E.U. retailer must register for VAT in only one E.U. state -- not all 27 -- provided that the merchant has to enroll in all states in which it has a physical existence, like an office or warehouse. Otherwise, choose a country. Ireland is a fantastic candidate for U.S. companies since there are no language barriers.
Regardless, once enrolled, merchants must file a quarterly return detailing the earnings and VAT due for every nation. The payment must accompany the return. To assist, the E.U. will execute a universal declarative system to document and subtract returns for all countries where a company isn't registered. Another return is required for enrolled nations.
Winners and losers
Pricing and classifying products on an ecommerce website is going to be a nightmare. Plugins, for example for WooCommerce, will help. The major problem is making sure products are in the correct category, so the correct VAT rate is assigned. Staying current on VAT rates will be challenging, too.
The extra administrative burden will probably result in many overseas retailers averting E.U. consumers directly, choosing online marketplaces like Amazon and eBay. Those marketplaces would be the"deemed supplier" of the merchandise and would thus assume the VAT duties. Presumably this will help cement the marketplaces' domination. Indeed marketplaces are encouraging the VAT changes because it drives more business their way.
The U.K. is introducing an almost identical set of principles as the E.U. Marketplaces are the"deemed suppliers" and thus accountable for VAT. Independent, non-U.K. retailers will need to register and charge VAT if they would like to keep on selling into the nation. The principal difference is the U.K. rules begin on January 1.
It's easy to see why the E.U. and the U.K. do so. It assists local merchants over international competitors. It doesn't necessarily assist E.U. and U.K. customers , however, who could wind up paying more for products and services.
The winners are small retailers that have traditionally offered to E.U. and U.K. consumers. Those retailers have thrived by providing better service at competitive prices. Now taxes and administration are ruining it all. It's a shame.
14 New Business Books for 2021
It is time to prepare your reading list for 2021. Here's a list of new and forthcoming business publications for entrepreneurs, managers, and creative professionals. Learn how to sell your company, exploit the power of programmers, adopt the principles of success in Amazon, change your thinking to attain quick mastery, and much more.
New Business Books for 2021
Jump the Line: The 10,000 teaser Principle and Other Surprising Advice for Reaching Your Goals by James Altucher
Skip the Line
In"Jump the Line," entrepreneur James Altucher delivers a new mindset and numerous methods to pursue your passions and achieve your dreams. Learn how to transform how you think, work, and live -- allowing your interests guide your learning, time, and resources. Alter your approach to change and crisis.
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Working Backwards: Insights, Stories, and Secrets from Inside Amazon by Colin Bryar and Bill Carr
Working Backwards
Authored by two former senior executives at Amazon,"Working Backwards" is an inside look at the principles and practices which drive Amazon's empire. The authors detail all 14 of Amazon's leadership principles and show how they direct decision-making whatsoever levels.
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Request Your Developer: How to Harness the Power of Software Developers and Win in the 21st Century by Jeff Lawson
Ask Your Developer
In"Ask Your Developer," Twilio CEO Jeff Lawson shows how, in today's digital economy, programmers are the vital ingredient for solving problems and producing success products. Discover why software developers matter more than ever. Explore how to inspire them and why it is vital to invest in their success.
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The Art of Selling Your Business: Winning Strategies & Secret Hacks for Exiting on Top by John Warrillow
The Art of Selling Your Company
The host of the"Built to Sell Radio" podcast, John Warrillow completes his trilogy on building a business with"The Art of Selling Your Business." Based on interviews with hundreds of cashed-out founders, this practical guide can allow you to value your company, determine the best time to market, create a bidding war, position your organization to attract buyers, optimize a price, and perfect your negotiating.
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The Introvert's Edge to Media by Matthew Pollard
The Introvert's Edge to Networking
You don't need to have to become a constant self-promoter for a successful networker. In"The Introvert's Edge into Networking," Matthew Pollard indicates that introverts make the best networkers when armed with a plan that enables them to be their true selves. Drawing on more than a decade of study and real-work examples, this manual offers an actionable blueprint for social media.
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Out of Office: The Big Problem and Larger Promise of Working from Home by Charlie Warzel and Anne Helen Petersen
Out of Office
The pandemic has ushered an era where flexible work arrangements are possible for everybody. "Out of Office" combines revolutionary reporting and the writers' first-person experiences once they decided to leave their desk jobs in new york for Montana. It outlines a path toward a new type of work-life balance that may enhance our own lives and strengthen our communities.
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Tarzan Economics: Six Principles for Pivoting During Disruption by Will Page
Tarzan Economics
Survival in business over the long haul has everything to do with adapting to change. In"Tarzan Economics," Will Page, the chief economist in Spotify, examines eight fundamental principles to assist companies change and flourish during game-altering disruptions.
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Digital Body Language: How to Build Trust and Connection, No Matter the Distance by Erica Dhawan
Digital Body Language
"Digital Body Language" decodes the new signals and cues which have replaced conventional body language. Learn how to manage daily misunderstandings in the present world of remote working, from large conferences and video meetings to daily emails, texts, instant messages, and telephone calls. Get insights and solutions to build confidence and clarity with anybody in our ever-changing world.
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The Five Tool Negotiator: The Complete Guide to Bargaining Success by Russell Korobkin
The Five Tool Negotiator
"The Five Tool Negotiator" is a guide for anyone eager to boost her bargaining skills. Explore the five different options that we can utilize: Bargaining Zone Analysis, Persuasion, Deal Design, Power, and Fairness Norms. Master the crucial skills of negotiation for all levels of a transaction.
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You Are What You Risk: The New Art and Science of Navigating an Uncertain World by Michele Wucker
You Are What You Risk
In"You Are What You Risk," Michele Wucker assesses why we avoid risk, when we ought to adopt it, and how we could re-shape our connection with doubt and chance to live more productive lives. Get insights, tools, and strategies to make better decisions about risks large and little.
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Inventor Confidential: The Honest Guide to Profitable Inventing by Warren Tuttle with Jeffrey A. Mangus
Inventor Confidential
For those who have a fantastic idea or invention and would like to market it,"Inventor Confidential" will show you where to invest your money to maximize your chances for success. Gain a broad picture of the challenges, the red flags, the development protocol, as well as the actions to market.
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Rethinking Users: The Design Guide to User Ecosystem Believing by Michael Youngblood, Benjamin J. Chesluk, and Nadeem Haidary
Rethinking Users
Notions of direct connections between products and people are no longer valid. "Rethinking Users" presents a fresh approach to understand the essence of consumer experience, using a deck of user-persona cards and step-by-step group actions for unlocking new user-centered thinking.
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Trustworthy: How the Smartest Brands Conquer Cynicism and Bridge the Trust Gap by Margot Bloomstein
Trustworthy
Marketers need a new strategy in this cynical age to instill trust and help customers make confident decisions. This lively fuels a wide Selection of high-performing organizations, such as Airbnb, Zoom, the U.S. Federal Bureau of Investigation, TED conferences, as well as The New York Times. In"Trustworthy," Margot Bloomstein shows how to use concrete strategies to help your brand gain confidence, respect, and loyalty, to direct your audience from cynicism to trust.
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The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion by Eliot Brown and Maureen Farrell
The Cult of We
In"The Cult of We," Wall Street Journal reporters Eliot Brown and Maureen Farrell detail the inside story of WeWork and its creator, Adam Neumann, from incarnation to a shocking multi-billion-dollar implosion. WeWork's rise and destruction were fueled by disparate personalities in a monetary system blind to its own dangers, including leaders in J.P. Morgan and Goldman Sachs. Why did some of the biggest names in banking and venture capital purchase the hype, and what does the future hold for Silicon Valley unicorns?
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