Does your international marketplace comply with new regulations in 2021?

Does your international marketplace comply with new regulations in 2021?

As you probably know, a marketplace is an intermediary platform which brings together online buyers and sellers. But a digital marketplace means international expansion. As such, an international legal framework applies. 2021 promises to be a great year. In this article, we’d like to present the very latest regulations for your international marketplace in 2021. Because if you’re well informed, you’ll be well prepared.

New EU rules on VAT

As our partner Lemonway explains, marketplaces will be subject to new VAT rules from July 1, 2021. These new rules include the implementation of the EU’s new VAT package. 

As it stands, every marketplace seller with customers in the EU has to have separate VAT records, invoices and payments for each relevant country. Thanks to the new VAT regime which comes into force on July 1, 2021, international marketplaces will be able to benefit from the OSS VAT scheme. The aim is to reduce administrative paperwork for suppliers of services and products who will be able to file a single VAT return in an EU member state. This will cover all transactions carried out within the European Union which will obviously save time and effort. This system is optional, meaning that sellers can choose to continue with the old system. 

In addition, this new measure for 2021 will see VAT being applied to all products imported from outside the EU, whatever their value (previously, items under €22 were exempt). 

This applies to sellers on every online marketplace and to couriers who work in the EU and deliver to European customers. End customers will be most affected as they will bear the cost of this new measure. Failure to comply with the new requirements can lead to a fine of 5% of undeclared amounts.  

International marketplaces and the 3-D Secure 2.0 system

From January 2021, all e-commerce transactions over €1,000 (previously €2,000) have been subject to the 3-D Secure 2.0 system. The process involves requesting authorization from the bank to approve a transaction, with the aim of minimizing the risk of online banking fraud. If the transaction is not authenticated, this authorization will be refused. The rule has been gradually extended in 2021, applying to transactions over €500 in February 2021 and covering all transactions under €500 since April 2021. 

The Banque de France and the OSMP (Observatoire de la Sécurité des Moyens de Paiement), which are responsible for this new measure, adapted a gradual implementation of this measure in the wake of the Covid-19 pandemic. It must be said that putting a new process like this in place takes time and has an impact on many different parties. 

The first to be affected are customers and sellers. Customers must have access to the bank’s mobile application and set up their biometric authentication system. This changes the purchasing process: a text message no longer suffices, something which makes the process less fluid for customers. The players in the payment chain must therefore work together to provide a personalized customer experience. Our partner Danelys has written an article on best practices.

The entry into force of the Digital Services Act (DSA) and the Digital Market Act (DMA)

The Digital Services Act (DSA) is the result of a review of the liability of hosting providers and technical intermediaries. The European Commission has identified 4 intermediary profiles:

  • ISPs or Internet Service Providers

  • hosts which provide users with tools to inform them of illegal content

  • traditional online platforms

  • very large platforms which represent more than 10% of the European population, or more than 45 million users. All platforms should provide a system for settling disputes internally, with the understanding that the larger the platform, the more extensive the liability. Very large platforms must also annually assess the risks to its users’ rights and security and inform the relevant authorities.

The Digital Markets Act (DMA) is a regulation which applies to all EU member states and aims to regulate marketplaces, with a centralized system within the EU. The European Commission will monitor and ensure compliance with the help of a Digital Markets advisory committee which will provide advice. 
As you can see, it’s vital to prepare for the new regulations in force for your marketplace. You need to do what you can to lay the groundwork. Please contact us to review and choose the best marketplace solution to ensure your role as a leading player, now and in the future.