At first glance, compliance seems like a complicated concept. The internet is full of tips and tricks on the topic, but what does compliance actually mean in the context of eCommerce and selling on Amazon?
In a nutshell, compliance describes the process of acting, trading, and selling in accordance with the applicable law and regulations. The guidelines in question can concern a variety of fields – from taxes to customer protection to safety and environmental protection. Some are more important for Amazon FBA sellers, some are less so.
Among the most crucial regulations to be compliant with for Amazon sellers are VAT and data privacy guidelines. These are topics in which specialised tools can help entrepreneurs to act in conformity with the law. The following article will show why compliance is so important and how to achieve it.
What Is Legal Compliance and Why Is It Important?
If you are selling on Amazon Europe and fulfilling orders with Amazon’s Fulfilment Programs you are most likely serving customers in a variety of countries. The more countries you are selling in, the more local and specific laws and regulations you have to follow – ranging from environmental protection laws to packaging requirements.
Of course, the specific pieces of legislation vary. However, if you are non-compliant with legal matters, you might not only face penalties but also exclusion from marketplaces or worse. In order to prevent fines and punishment and to make sure you follow the variety of guidelines in place across Europe, you can use Legal-Compliance-Management Tools like Libryo.
These tools help online shop owners and Amazon sellers navigate complex regulations clearly and securely and introduce them to all laws that apply and have to be observed in the respective countries to which they sell by offering location-specific and industry-specific legal registers.
Furthermore, all updates and changes to the laws and regulations are always prepared in simple, jargon-free language to also offer users without legal knowledge the opportunity to check compliance with local legal requirements.
What Is VAT Compliance and Why Is It Important?
VAT compliance describes the lawful fulfilment of duties concerning VAT – the Value Added Tax. These include – among other responsibilities – the obligation to register for VAT at a certain point, the task of collecting the right amount of VAT from end consumers, the obligation to turn in regular VAT returns once registered, and the task of paying the VAT debt to the authorities to which the VAT is owed.
For example, if you establish a business in your home country you will need to immediately also register for VAT. Additionally, you need to register for VAT in foreign countries if your turnover through transactions with customers located abroad crosses a certain threshold or if you store products abroad, as is the case when using Amazon Fulfilment Programs. Once registered you need to submit regular VAT returns adhering to the local rules, formats, and deadlines.
Customers from different countries need to be charged different VAT rates, which means you need to implement a corresponding system in your online shop or Amazon storefront to charge the correct VAT rates. Lastly, the debt needs to be paid on time and most probably to several different tax authorities individually.
Not taking care of VAT compliance will lead to difficulties. If you forget to turn in VAT returns or submit faulty returns, you will most likely face fines or late fees. Furthermore, if you forget to register for VAT in time and don’t charge customers VAT, you are still subject to VAT nonetheless. In this case, you will not only face fines but will also need to pay VAT debts even though you didn’t charge VAT, therefore reducing your profit.
That’s why VAT compliance is so important and that is where tools like hellotax come in. Specialised in VAT for E-Commerce and Amazon selling in Europe, the Amazon FBA accountant hellotax can take care of all your VAT duties – from registration to the submission of returns.
The hellotax VAT compliance software monitors all your transactions, receives your tax letters, alarms you if a deadline is approaching, and automatically compiles reports.
The hellotax team files your returns and can also assist you in forging ahead with the One-Stop-Shop, the EU’s alternative to multiple foreign VAT returns, which enables you to declare all intra-European cross-border sales in a combined return in your home country.
What Is Privacy Compliance and Why Is It Important?
Another important topic is data protection and privacy – especially if you’re an Amazon seller active in the European Union. That’s because the General Data Protection Regulation (GDPR), which was introduced in the EU in 2016, places maybe the highest demands ever on companies when it comes to data security.
Any company that receives personal data from European customers must ensure that the data is stored safely, only used for certain purposes, and diligently deleted. The data protected includes names and website usage data, as well as addresses, account information, and transaction data of customers on online platforms such as Amazon.
Privacy compliance in the European Union might be the most important topic for Amazon sellers, though the most often overlooked, as the penalties imposed by the European Union for non-compliance with the General Data Protection Regulation are very high and might easily ruin a self-managed Amazon business.
Help comes in the form of tools like privIQ, formerly GDPR365. Data security compliance tools such as these offer a complete overview of requirements and tips on how to implement them, opportunities to monitor data management processes and security measures, the possibility to assign tasks to individual employees or the data protection officer, alarms to access requests and data security violations, and more.
How Can I Implement Compliance Measures?
If you are managing your Amazon FBA business by yourself, you only have to research regulations or use tools like the ones presented above to trade and sell compliantly across the European Union. However, if you have employees or business partners, you need to make sure everybody is aware of compliance measures you have implemented or steps that have to be followed.
There are a variety of digital learning tools and platforms on the market that serve to create compliance awareness in your business. They offer everything from online course libraries with videos on important topics such as GDPR, information security, and tax law and functions to create bespoke training content to ratings, questionnaires, surveys, and other tools to engage employees.
While compliance tools serve as the first step toward legal, VAT, and privacy compliance for Amazon’s sellers in Europe, digital learning platforms can ensure that your whole team acts in conformity with regulations when scaling your Amazon shop. This way, penalties are avoided and you can continue concentrating on your core business while trading and selling legally.
About the Author:
hellotax is a tech company that builds automated solutions for VAT compliance. Companies of every size use our software to ensure their VAT compliance while selling online in Europe.