“We had no way to understand the different tax policies and rates in the EU.”
We spoke with David Rogers, director of Australian Firefighters Calendar. He explained how difficult it was for Australian companies to reach the EU market after the introduction of new EU trade rules. He also told us why he decided to opt for Eurora’s IOSS service.
Australian Firefighters Calendar is the biggest selling calendar in the world. They sell calendars in 99 countries, and they have been in business for 30 years. Australian Firefighters Calendar raises funds for charities around Australia. They donated over $3 million dollars to various charities, and they support charities around the world.
The EU – a promising but complicated market for Australian sellers
EU regulations are constantly evolving and complicated. It is already challenging for UK-based companies to cope with new trade rules. Charlie, founder of Plant Faced Clothing, explained it well to us. So, when your Australian business is some 15.000 km away and 10 hours jetlag from EU clients, the confusion can only be greater.
For Australia, the European Union is one of the biggest foreign markets. In 2020, it was Australia’s second-largest trading partner and source of foreign investment. However, trading with the EU is a tough task for Australian companies.
There is no free trade agreement between Australia and the EU. Negotiations are ongoing since 2018, but no agreement has been reached yet. In comparison, there is an EU-UK Trade and Cooperation Agreement that facilitates the exchange of goods. A free trade agreement would help small and medium-sized companies like Australian Firefighters Calendar. It could reduce costs and improve the competitiveness of Australian products in the European market.
Australian companies trading with the EU are subject to a common external tariff on goods export. There are specific tariffs on goods according to HS Code and product description. Applying the right HS codes to goods is already a time-consuming task for Australian companies. If you add new restrictions on top of that, it rapidly becomes unbearable for many Australian sellers.
New EU trade rules – a big challenge for Australian companies
David knows that feeling well when unexpected trade rules hit your business. Before the new regulations disrupted the way goods are traded in the EU, he didn’t have to bother with VAT. There was a Low-Value Item Exemption in place, meaning that all goods under €22 could be imported free of VAT. However, when the EU abolished this threshold, sellers were suddenly compelled to collect VAT on all goods they sell to EU customers. This resulted in unexpected chaos for overseas companies. David recalls: “We had absolutely no clue what to charge, we were losing money, we were charging too much, our customers had to pay tax when the package arrived”.
Like many other businesses, David rapidly realized that he couldn’t continue sending packages to EU customers without exterior help.
There was no way we were going to achieve that without Eurora’s help.
Eurora’s IOSS solution – an easy way to keep your EU customers
Australian Firefighters were one of Eurora’s first clients. They were recommended our services by another Australian business that was facing similar issues with the EU market. They didn’t consider any other solution and they started their IOSS registration right away.
To help non-EU companies cope with the new VAT requirements, the EU created the IOSS electronical portal. Using the IOSS scheme is the best option to easily keep your business running in the EU. However, non-EU businesses cannot register to the IOSS by themselves. They need a fiscal representative like Eurora to use the IOSS scheme.
When asking David how his onboarding with Eurora team went, he didn’t hide his enthusiasm. He describes it as “Absolutely fantastic, easy, efficient. Absolutely spot on”.
Since he uses the IOSS scheme, David doesn’t need to fear any unexpected fees when the packages clear to customs: “Now all our taxes are paid upfront, and our customers get their products without having any interference”. This is a great improvement for his customer satisfaction. “Our customers are just receiving their goods without having to pay anything once those goods arrive”.
David not only saves time but also improves his customer experience. Furthermore, he can keep his small structure that is specific to his business. Selling calendars is a seasonal activity. It wouldn’t make sense for them to hire a full-time employee dealing with VAT and customs clearance-related issues in the EU. Having Eurora as a partner, David can keep his structure as it always worked before the new trade rules: “With your expertise, we don’t need a lot of people”. That is why he plans to keep using our services in the future too.
Eurora – a full eCommerce solution
Eurora is an intelligent cross-border solution. We combine machine learning technology with a personal approach. We are the first company that officially gave out an IOSS number to a client.
With the IOSS, you register in one of the 27 Member States only and submit one monthly IOSS VAT return. Without the IOSS, you need to register in each state you trade with separately. The IOSS solution also helps you move your goods faster to customs. VAT is collected when the client makes a purchase, so there is no risk to see the package held in customs. It also ensures more transparency for the clients: they see the VAT due in their shopping cart. So, they do not risk any unexpected fees when the package goes to customs.
The IOSS is only one of the many services we can offer to make sure you comply with every global trade rule. We offer UK VAT agent services, automated Custom Clearance, Duty&Tax Calculation, HS code Allocation, and even Restriction Screening.
Is your business struggling to reach EU customers? Get in touch with us and we will take care of your IOSS registration in a few days.