Why it’s a great time to include the EU in your export push
- Written by Chris Calverley, Head of Sales and Partnerships – ANZ at Avalara
With the US market beset with unknowns, training your sights on mainland Europe in 2025 makes sound sense.
Wondering whether the introduction of tariffs will play havoc with your plans to build a solid customer base in the USA? It’s a reasonable concern given the ongoing uncertainty around this topic, following the inauguration of the Trump-led administration on January 20.
The US market has long been an attractive one for ambitious Australian businesses – with a GDP of close to $US30 trillion and home to a population of more than 335 million, it represents an extraordinary opportunity to grow and grow and grow.
While, to date, Australia hasn’t been singled out for mention in the talk about tariffs, there’s every possibility local businesses could become subject to an additional impost at some stage down the track, should they seek to sell their wares stateside.
That could well take the shine off the opportunity; making it less lucrative, if not downright unprofitable.
While there’s no cause for panic – yet! – it’s certainly a case of ‘watch this space’.
Exploring alternative opportunities to sell abroad
And, while you’re watching it, dipping a toe into alternative markets may prove a prudent course of action.
Doing so could ensure you’re not left scrambling, should the US government decide to call time on the country’s tariff free trade with its pals across the Pacific.
Although it’s further from home and comes with language barriers, the European Union may be a smart destination on which to set your sights.
With a population just shy of 450 million, the bloc is significantly larger than the US. Although it’s not a single country, it does function like one in some respects, including the adoption of the Euro as a national currency in all but seven member states.
Looking into logistics
While you’ll likely opt to ship direct from Down Under until critical mass is achieved, all 27 EU states are relatively easy to service from a single 3PL. Courtesy of its proximity to highways, byways and airports, The Netherlands abounds with such centres, all of them well versed in supporting offshore operators that haven’t achieved the scale necessary to establish their own warehouses.
Another plus for new market entrants is the fact that all 27 member states have adopted a harmonised set of Value Added Tax (VAT) rules, easing the path to market for sellers across EU countries. VAT is fixed at a minimum of 15 per cent, with member states free to vary it higher and to maintain a maximum of two reduced rates for specified categories of goods.
That’s slightly more complex than our own 10-per-cent-across-the-board GST but significantly simpler than the set-up in the US, which maintains an extraordinary 13,000+ sales and use tax jurisdictions, along with different laws for marketplace facilitators and remote sellers across the 50 states.
Conquering compliance on the continent
But, like their counterparts here at home and in the US, European authorities tend to have low tolerance for businesses that aren’t on top of their compliance obligations.
Correcting tax errors can be time consuming and tricky, particularly for Australian businesses that find themselves attempting to deal with entities where English isn’t commonly spoken.
Getting things wrong can have an adverse effect on your customer experience too. Failing to pay the correct duty on an outgoing order may result in it being stuck in customs for an extended period – a situation that’s unlikely to endear your business to the customer awaiting its arrival.
You’ll save yourself time and trouble by getting things right from the outset. That’s where automated tax compliance software has a powerful part to play. It’s designed to make it easy for overseas businesses to start selling in the EU, by simplifying and streamlining all the tasks associated with tax compliance. These include registration, licensing, calculation, document management, reporting and e-invoicing.
With this technology in your stack, you’ll be able to apply the taxes and charges in all 27 EU member states, correctly and in real time.
Taking on the world with the right technology
If you’ve set your sights on ongoing growth, having a solid export strategy is critical. So is having a back-up plan and being prepared to pivot, if circumstances change and the overseas jurisdictions where you’ve begun building a presence become less hospitable.
With an automated tax compliance platform in your tech stack, you’ll be able to sell to customers in multiple countries with confidence, secure in the knowledge you have the compliance detail covered for each and every one of them.
If transforming your business into an export success story that can weather the vicissitudes of political and economic uncertainty is your goal, it’s an essential investment that will help you achieve it.
