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Selling wine online in the EU – not as easy as it should be?

Several clients have recently asked us to advise on setting up a website to retail wine – usually from a variety of small, independent, producers in various EU countries – for delivery directly to consumers throughout the EU.  We have also had enquiries from a number of EU wineries wanting to sell their products online in the same way.

Why is it attractive?

Enables smaller producers to reach a larger audience without needing to involve a traditional agent or distributor and pay him a commission or mark-up.  Stock need only be held at the relevant wineries, for call-off and collection by courier to meet customer orders when needed.  Excellent cash flow.  What’s not to like?

Why is it difficult?

No prizes for guessing that there is a whole raft of UK and EU legislation the website must comply with, in terms of both its content and the way it operates.  However, a critical practical requirement is that when a supplier in one EU country arranges to deliver excise goods direct to a consumer in another EU country, the supplier must (a) register and submit returns for VAT in that country – there is no minimum turnover threshold for excise goods, and (b) appoint a “Fiscal Representative” to look after payment of VAT and excise duty in that country.

The VAT registration side of it may not be too difficult, since in many EU countries it can all be done online.  However, the challenge appears to be finding a partner who can handle the fiscal representative role, working in conjunction with a reputable courier, and at a reasonable cost.  The feedback we have been getting is that although there are firms who will provide these services, the cost is prohibitive for what will probably be low volume business to begin with.  Consequently, the online retailer feels it must limit delivery to its own country.  Or consider other modi operandi.

Will it get easier?

To the extent that these requirements prevent a wider range of quality wines being offered directly to consumers throughout the EU, they may amount to obstacles to the smooth functioning of the internal market.  The European Commission is alive to the problem, it seems, and has set up a Project Group to assess the situation.  Its report is expected in Summer 2014.

What to do in the meantime?  Please feel free to get in touch if you need advice on the legal and regulatory aspects of what you would like to do and, if it is going to be too problematic, on alternative models you could consider.