Alibaba takes on Amazon in Europe
In February 2018, Alibaba signed an agreement with the Belgium government to open its first warehouse in Europe. The warehouse is located next to the Walloon city of Liège and has a prospective size of 380,000 sqm (approximately 50 football fields). It is expected to be fully operational in 2021.
So far, China´s JD.com has failed to reach a similar agreement with European governments. Therefore, this move would make Alibaba the first Chinese e-commerce platform taking on the EU market with its own logistics network.
eWTP – Shipping to the World
Alibaba’s move into Europe is part of the project “Electronic World Trade Platform”. With eWTP, Alibaba wants to enable vendors at any location to ship goods to any market in the world within three days.
Cainiao, a subsidiary of Alibaba and a logistical company, currently ships to thirties cities overseas across six countries and regions, all within a five-day time frame. The new five hubs: Dubai, Hangzhou, Kuala Lumpur, Liege and Moscow, should allow it to go even faster and to also improve its quality. The goal is to ship to 1,000 cities in three years´s time.
In Europe, Chinese e-commerce companies have a lot of ground to gain: US rival Amazon already runs over 60 warehouses in Germany, France, Italy and the UK alone.
With the new upcoming logistics hub in Liege, we can expect that there will be more Chinese companies joining the booming Sino-European cross-border e-commerce business. On the other hand, we also see great opportunities for European companies to maximize their potential for cross-border trade in China, where the appetite for European products is ever-growing.
By July 18, 2019, Amazon closed down its e-commerce platform for third party sellers in China. In the end, the company was unable to compete with JD.com and Alibaba over Chinese customers. Given this fact, we can be sure that Amazon will pay extra attention to Alibabas moves in European market.
How to comply with the German VAT law?
As Ecovis pointed out in a recent webinar, Germany is cracking down on tax evasion by online vendors from outside the EU. On January 1, 2019, the Law for Preventing VAT Evasion in E-Commerce went into effect. As German media reported, the law is specifically aimed at countering tax evasion by Chinese online vendors.
It makes marketplaces like Amazon and Alibaba liable for any VAT losses caused by transactions on their platforms. § 22(f) of the German VAT law (UStG) obliges marketplaces to record name, address, VAT identification number and other data about their vendors. Marketplaces also have to provide data on individual transactions like turnover and shipping information.
Since January 1, 2019, marketplaces are requiring their vendors to submit the relevant data to the German tax authorities. In accordance with § 22(f) of the German VAT law, vendors must apply for a “certificate of registration as a taxpayer (entrepreneur)”. This then serves online merchants as proof to the marketplace operator that they are registered in Germany for VAT purposes.
Ecovis Beijing – your VAT Expert in Germany
If you ship your goods from a warehouse in Germany to your European clients, or if your revenue from exporting goods to Germany via e-commerce exceeds 100.000 euros, you have to register your e-commerce business in Germany for VAT purposes. If your company does not have an establishment in Germany?, in that case, you cannot apply for a certification as taxable entrepreneur by yourself. According to § 22(a) of the VAT law, you must appoint a fiscal representative (Fiskalvertreter) in Germany to carry out the application on their behalf.
Ecovis Beijing is your trusted partner in all things e-commerce and VAT. Please refer to our team of Chinese and German legal experts for further information.
Ecovis Beijing German VAT compliance Services
- German VAT registration/de-registration
- EORI registration
- Monthly and Annual VAT Return
- Intrastat report
- EC Sales Lists
- VAT representation
- VAT advisory
About the Author
Business Development Manager
Zhiruo Zhao is a manager in our business development and marketing team. In our Heidelberg office, she is the primary contact person for Chinese and international customers who she supports in their endeavors to master the challenges of the German market. Ms. Zhao focuses on areas such as company formation, labor law, human resource management and German VAT compliance for e-commerce sellers. Ms. Zhao teaches Chinese law at SRH Hochschule Heidelberg as a guest lecturer.
Ms. Zhao has been living in Germany for 9 years. She studied in Chongqing (China), Osnabrueck and Heidelberg. Before joining Ecovis Beijing in 2016, she worked for a marketing research company in the field of marketing and data analysis. Previously, she worked on several projects for the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in China and Germany. Ms. Zhao speaks Chinese, English, German and Spanish.
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