For cross-border e-commerce businesses looking to do business within the European Union, keep up with the complex and ever-changing world of trade regulations – from codes, declarations, duty and tax calculations to customs clearance requirements that can vary from country to country – can be a daunting task.

The EU’s Value Added Tax (VAT) rule, under which imports worth €22 were not subject to tax, was scrapped in July last year, further complicating the regulatory environment for many e-commerce businesses who now have to endure heavy bureaucracy to pay VAT. on all their imports.

“Most reported e-commerce goods were under €22 [and therefore exempt from tax]Egon Veermae, COO of Estonian e-commerce compliance firm Eurora Solutions, told PYMNTS in an interview.

He added that these strict regulations are in stark contrast to the United States, where companies enjoy an $800 threshold before being subject to tax rules.

Another challenge that EU cross-border businesses face is the requirement to now declare all goods to customs. According to Veermae, this leads to the complex task of having to calculate different VAT rates depending on where the recipient is based — for example, the standard VAT rate is 19% in Germany, while in Estonia it is is 20% — in addition to other tax requirements that companies may be subject to.

Ultimately, businesses are struggling to keep up, leaving them in dire need of a solution that helps them calculate their taxes correctly. It’s a solution that the artificial intelligence (AI) and machine learning (ML)-backed company offers its clients through its proprietary platform that fully automates tax, compliance and customs departments.

“We have integrations with the various European customs authorities because there is no [centralized] customs authority in Europe,” Veermae explained. “Beyond these technical integrations, there is also the language barrier that we help overcome.”

Unlike some competitors, Eurora Solutions’ automated solution comes with a customer support service to help customers navigate new regulations.

“When we onboard the client, we always appoint you a special tax accountant who can always answer all your questions,” he noted.

Expansion in the Middle East

Last month, the cross-border e-commerce compliance platform landed $40 million in Series A funding in an oversubscribed round that was considered one of the largest such funding rounds in the world. Estonian startup ecosystem.

Read more: Eurora Solutions secures $40 million for e-commerce compliance platform

According to Veermae, part of the funds have been earmarked for expansion into Middle Eastern markets, which hold huge potential for business growth but require a good understanding of the local culture and how to successfully set up a business in the region.

“We want to find our niche and identify how we can help businesses,” he said. “This is the biggest challenge, in addition to ensuring good penetration in these markets.”

However, another challenge will come from regulators and pressure from governments on cross-border businesses to collect more taxes.

“Countries now require e-commerce platforms to start collecting cross-border taxes, I think that’s going to be the biggest challenge,” Veermae said. “It’s been implemented in the UK, now in Europe, and next year Singapore will start using the same logic.”

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