This is a partner article from the Händlerbund e-commerce association and was written by legal editor Melvin Dreyer. Discover everything you need to know about the main legislation changes for European e-commerce in 2020.
2020 will be another eventful year for online retailers: the EU has already planned and approved numerous changes to its legislation.
The majority of the laws which affect online retailers are now based on the European Union’s legal guidelines. Intensive work is under way to create a standardised single market which will make cross-border trade easier and more accessible for small and medium-sized businesses. In this regard, certain initiatives have been proposed for 2020 which will impact online retailers and the e-commerce sector later this year and in the years to come.
CPC Regulation: Authorities can close shops
The EU legal framework needs to be harmonious not only for employers, but also for consumers: as of 17 January 2020, the CPC Regulation (Consumer Protection Cooperation) in the European economic area has been addressing cross-border trade. Purely domestic trade is not included in this.
The regulation allows for a network of consumer protection authorities that will get involved if the rights of consumers from a member state are violated by a company from another state. In such an event, the authorities will be granted extensive powers and can carry out on-site inspections, view documentation and make test purchases.
Greater emphasis will be placed on the ability to react: consumers can be informed via claims for compensation, while certain businesses will be prohibited. In addition to imposing fines, another last resort is also available. If nothing else proves effective, authorities may be permitted to close down shops in serious cases.
Omnibus policy with numerous amendments
The Omnibus policy put together a package of measures for e-commerce. It entered into effect on 7 January 2020, however this date is of little significance to retailers. As it involves EU legislation, their regulations must be implemented by national legislature in order for them to take effect.
The forthcoming amendments affect many aspects: for example, changes will be made to consumer rights and the Price Indication Directive which will require action regarding labelling and information requirements. Marketplaces will be particularly affected by this and will then need to disclose their key ranking factors. This transparency could also be beneficial for marketplace retailers. Other changes involve simplifying the conclusion of contracts via chat, real-time customer reviews and notification obligations for personalised prices. Potential fines should be harmonised across the EU.
The concrete nature of the changes will depend on their implementation by the legislature in each country.
Tax package: Focus on cross-border trade
Certain changes have also been made to taxes which particularly affect value-added tax.
At the end of 2020, the European Public Prosecutor will resume its work. 22 member states are participating in this project and want collaboration between individual authorities, particularly regarding the topics of subsidy fraud, corruption and cross-border VAT fraud.
In general, cross-border taxation should become more simplified. From 2021, a central coordinating body will be founded to which the taxes for other member states will be paid, similar to the mini one-stop-shop system for digital services. Marketplaces should be actively incorporated into the taxation of turnover of marketplace retailers to curb taxation fraud. In Germany, a similar regulation has been applied since last year, however this works differently to the one planned by the EU and so changes will almost certainly be made in this regard. For 2025, measures will also be taken to reduce compliance burdens for small businesses with regards to taxes.
ePrivacy Regulation: What is the current status?
It was due to take effect in 2018 along with GDPR to enhance data protection. However, nothing has come of it yet. At the end of 2019, it seemed as though the final draft was ready, but nothing has appeared on the table yet.
However, there are clearly conflicting positions and a need for explanation regarding the content. Whether, when and how the regulation will be adopted cannot be said with any certainty.
PSD2: Deadline for Christmas trade
PSD stands for Payment Service Directive and affects payment service providers. The regulation focuses on secure and future-oriented payment transactions. An important point of the PSD is Strong Customer Authentication (SCA), which will bring additional security elements for electronic payment processes. However, its implementation, which should have happened last year, is behind schedule. The European Banking Authority has therefore moved the deadline for implementing online credit card payments to 31/12/2020. All banks and credit card issuers must adopt the technical implementation. However, this will also change the payment process for online purchases. In the e-commerce sector, there are fears about the effect on Christmas trade due to cancelled purchases. Online retailers should therefore start informing customers and shop visitors about the changes as early as possible.
Brexit: Impacts in 2020
On 31 January 2020, the United Kingdom left the European Union. The topics addressed in this article show the significance of EU membership for a nation from a legal standpoint. Accordingly, the UK’s departure will also have an impact on online retail. However, much will remain the same initially: a transition period will apply until 31 December, in which EU regulations will continue to apply as they did before. During this period, negotiations will be held regarding the future legal situation, for example concerning the conditions of a free trade agreement. Customs, shipping, taxes, consumer protection, data protection: there is much that needs to be considered. And so, although things will remain the same for now, the future is interesting: if the EU and the United Kingdom do not reach an agreement by the end of the transition phase, this will result in a hard Brexit. In this case, as of 1 January 2021, the United Kingdom would become a third country with no special agreements in place. Further information is available in our Brexit FAQs.
The Händlerbund is here to help!
The legal protection of their online presence can create a huge amount of work for many online retailers. The Händlerbund is available to assist you with any legal queries you may have. If, as a retailer, you opt to use the extensive legal services of the Händlerbund, you will receive a 3-month discount for the first year of your chosen membership package by using the discount code P841#2015.
About the author
Melvin Dreyer has been working as a legal editor for the Händlerbund since mid-2018. During his law degree, he passionately contributed to articles and imparted specialist knowledge. As an editor, he now regularly reports on new legal changes and queries regarding e-commerce.
