Binder 1

Simple online or may be not – Consumer protection

Just because you have dreams of an online business doesn't mean you are prepared and know what to expect and prevent any obstacles.

Selling online means you are not meeting the consumer face-to-face and, in this case, additional protections apply for customers. Provided that the product you offer is not specially targeted towards wholesalers. If it is accessible by retail clients, you need to comply with the relevant requirements of the country of destination which concern consumer protection.

When you attempt to sell online you should consider certain regulations before you begin. First, you need to define if you will act as a non-trader. For example, if you are going to be selling used item or you are going to be a trader, i.e if your business will be selling online. This is crucial in terms of the legal provisions including the taxes you will need to pay.

Also, if you are going to sell cross-border you shall take into consideration the rules of the country of your residence. In many cases, especially if you act as a trader and target non-traders,(consumers), the requirements of the county of the consumer are relevant as well.

Why taxes and custom duties matter in e-commerce?

Online selling and e-commerce are possible thanks to new technologies and the Internet. They are the means of borderless e-commerce. But an important part of doing business is ensuring that your business keeps up to date with its taxes. Failing to pay taxes can be followed by a range of consequences. If your company fall behind on its taxes, it faces fines and/or penalties and /or court proceedings. Online selling is complicated due to the compliance issues related to taxation on cross-border business and only the good will or intention of paying taxes is not enough. You have to do your homework first. Then start your online business initiative.

Are you aware that the domestic provisions on taxation and import/export are still relevant for e commerce, significantly challenging, even. Despite parts of the world attempting to harmonize tax treatment cross-border - (for example the Value Added Tax within European Union), the taxation in general is still fragmented with no general worldwide solution in the context of cross-border e-commerce.

If you have decided to do business online and to sell goods or services you are going to be subject to direct taxes - corporate or individual, as well as indirect taxes - sales taxes, value-added taxes (VAT) or goods and services taxes (GST). Moreover, as in most of the cases the goods will be sold cross-border applicable will be customs duties of the relevant country.

In this topic you will learn about:
  • Direct Taxes or ‘twin concepts of source and residence’

  • Indirect Taxes

    Most of the countries apply indirect taxes, such as sales taxes, value-added taxes (VAT) or goods and services taxes (GST) to raise revenues. Still there is no worldwide unified approach to undirect taxation of cross-border transactions. The rates applicable for Indirect taxes vary from country to country worldwide:


  • Customs Duties

    If an item sold via online trading needs to be delivered cross-border, shipment is going to be subject to duties and taxes as determined by customs in the destination country. There are many different types of customs applicable in case of import or export. These charges are not standard for each country. The main customs charges is going to be import duty and tax. Import duty will vary from product to product.

Data Protection & Privacy

Data privacy is connected to the business’s obligations to protect customer’s and partner’s personal data from unauthorized access.

By using electronic communication channels people share their personal data every minute, sometimes even unknowingly, which put them at risk. The personal data reveal one’s identity and easily could be used for illegal activities – so called identity theft. Such an activity could be property misappropriation, or using personal data to commit a crime. The consequences would be significant, so it is of great importance to put in place necessary measures to protect personal data from unauthorized access.

All e -commerce business must adhere to the regulations as defined by the competent Data protection authority. As a personal data controller, you need to be ready to communicate with the relevant Personal Data Authority. Finally, you shall disclose your privacy statement by which you inform your customers and partners how, when and why you’re collecting personal data, and what purpose it is going to serve.

businesses that did not adhere to these regulations, fines could be issued. For example, failure to comply with the GDPR may result in significant fines of up to EUR 20 million or 4 % of your company's global turnover for certain breaches. The Data Protection Authority may impose additional corrective measures, such as ordering you to stop processing personal data.

Have a question? Drop us a line!