#412 – Expanding Your E-commerce Business into Europe with Melanie Katsaris’ Tax & Compliance Expertise
Join us for an engaging and insightful conversation with Melanie Shabangu-Katsaris, co-founder of Avask, as we explore the vast opportunities in expanding global e-commerce. Melanie shares her expertise on why sellers should consider expanding their operations beyond their current markets, whether moving from the U.S. to Europe or vice versa. She provides an overview of how Avask supports sellers with critical aspects such as taxes, shipping, and compliance. We also reminisce about the close-knit nature of the Amazon-seller community, highlighted by memorable industry events like an unforgettable evening at a Beyoncé concert.
Listen in as we navigate the complex landscape of global e-commerce regulations, focusing on the differences between selling on Amazon in the U.S. versus Europe. Melanie sheds light on the regulatory challenges sellers face, including VAT registration and customs documentation, and explains why the maturity of the U.S. market often leads American and Chinese sellers to prioritize it over Europe. Despite these challenges, Melanie emphasizes the significant opportunities available in Europe and offers valuable insights to encourage more sellers to expand internationally.
Finally, we discuss the comprehensive services Avask offers to help sellers achieve international compliance, particularly in the UK and Europe. From VAT compliance to the Extended Producer Responsibility (EPR) eco-contribution, Melanie explains how Avask simplifies these complexities for sellers. We also touch on recent changes in European regulations, such as Amazon’s new VAT on Amazon initiative, and how Avask collaborates with Amazon to ensure seamless compliance for sellers. This episode is a must-listen for anyone looking to broaden their e-commerce horizons with expert guidance from Avask.
In episode 412 of the AM/PM Podcast, Kevin and Melanie discuss:
00:00 – Expanding Global E-Commerce With Avask
02:42 – VIP Experience at Beyonce Concert
08:01 – Leveraging Technology for Business Growth
13:59 – Navigating Global E-Commerce Regulations
18:37 – Marketplace Regulations
20:24 – Navigating European E-Commerce Tax Regulations
23:29 – Amazon’s Market Expansion in Europe
27:16 – EU VAT Compliance Regulations Impact Sellers
32:11 – International Tax Compliance and Reporting
34:23 – Navigating International Tax and E-Commerce
36:48 – Declaring Taxes and Customs
42:33 – Expanding International E-Commerce Compliance
43:21 – Global Shipping and Customs Impact
47:39 – Amazon’s VAT Program Conclusion
49:23 – Amazon Sellers Facing Compliance Changes
56:13 – Kevin King’s Words of Wisdom
Transcript
Kevin King:
Welcome to episode 412 of the AM/PM Podcast. My guest this week is none other than Melanie Shabangu Katsaris. She’s the co-founder of AVASK. AVASK is a UK-based company that helps sellers expand around the world. They take care of the taxes, they take care of the shipping, they take care of the compliance. A really, really good company. And we talk about why you should consider expanding outside of the United States if that’s the only place you’re selling, or vice versa, coming into the United States if you’re only selling in Europe, and how Avast can actually help you with that and some of the things you need to be aware of. There’s some things that have come up that you definitely need to be aware of, so this is going to be a great episode. Enjoy this episode with Melanie. And remember, if you’re not a Helium 10 Elite member, you can check out Helium 10 Elite at 10.me/Elite. H10.me/Elite. Avast in fact sponsors some of the European Helium 10 events that happen the quarterly events. One recently in Spain, there’s been a couple others. I’m sure there’s going to be some more coming up in the future. Avast is always involved in those. Welcome back to the AM PM podcast. Today I have an amazing guest. She’s like one of the most amazing guests from across the pond. It’s Melanie Shabangu Katsaris. Did I get that out right?
Melanie:
You did. You did, you got the Greek one. Okay, Katsaris.
Kevin King:
All right, awesome. How are you doing, Melanie? It’s good to see you.
Melanie:
I’m doing great, Kevin. How are you?
Kevin King:
I’m alive and kicking, as my friend, Mark Don would always say. I’m glad to have this chat with you because we always see each other at different events, because you’re usually sponsoring. You guys AVASK your company sponsors a lot of events, including some of the ones that I do. You guys had a race car and the last Billion Dollar Seller Summit which was really, really cool but we never get to sit and like have a really good talk, so that I’m super excited to have you here on the AM/PM Podcast.
Melanie:
Thank you, thank you so much. I think we met many moons ago and I know that we’ve never sort of like had this. We’ve had a one-to-one when we were out somewhere in the middle of nowhere in Seattle. Was it in Seatle? Not Seatle.
Kevin King:
Oh, no in Seatle. We went to the Beyonce concert.
Melanie:
We went to the Beyonce concert, yes.
Kevin King:
You and your husband. That’s right. We met at Accelerate last year in 2023, I get this message from this gentleman. He’s like hey, what are you doing tomorrow night? I’m like I’m not sure, maybe going to dinner with some people. He’s like, oh, you want to go to the stadium, I’ve got a skybox or whatever for Beyonce. I was like, hell, yeah, I’ll go sit in a skybox for Beyonce. So his company had, like they owned a skybox and so that I don’t know how exactly worked, but he got tickets. So it was me, you, your husband, a few other people and we went up there and I saw Beyonce. That was awesome.
Melanie:
That is honestly, it was amazing. It was so sort of like unexpected. I looked at it and I was like I’m gonna say it because it’s in my mind anyway. I thought what a bloody group of misfits.
Kevin King:
It really was. I think it’s. Sean Hart was in there. It was like a bunch of just a.
Melanie:
Yeah, it was just a mess. It was one of this group that you wouldn’t actually see it together. I think people can see us together in an Amazon serious business meeting, but not at a Beyonce concert. I mean it was, but we had great fun. It was such a blast.
Kevin King:
I mean, that’s the way to do it, you know, is to go into those boxes. Yeah, you know, whenever I go to prosper or something, you know Tim or somebody is always organizing these uh something at the club and he and if I had to go in there and stand with the crowd and jump up and down, that’s just not my thing. But when Tim does that, he gets those VIP booths and we had the VIP at the Beyonce. That’s the way to roll. That’s the way to roll for sure.
Melanie:
I think it’s about making memories along the way and just for the first time, I saw Beyonce live and I’ve got photos of all of us together and you know it’s just creating memories and with this e-commerce family and you know it’s like your extended family. That’s how I actually feel like. So it was great. I had a great time.
Kevin King:
Something a lot of people don’t know. You know, this AM/PM Podcast is put out by Helium 10. And the guy that actually asked me to host this podcast it was started by Manny Coats back in 2015, I believe, when he was starting his journey as a seller, and then that evolved into he was making some little tools for himself, just as a seller, and he’s like you know what? I could actually probably monetize these tools because other sellers would probably want something. So that developed into Helium 10. And I met Manny in early 2016. I came on the podcast. He convinced me to come on the podcast and then he carried on doing the podcast and then stopped for a little while. Tim Jordan took it over and then, a couple of years ago, this guy named Bojan you might’ve heard of him, you might know him he calls me up and says, Kevin, do you want to take over the AM/PM Podcast? I’m like I don’t know, you don’t want to step on Bradley’s toes or anything. And he says, no, it’ll be fine, just be yourself, just do your thing. And so I was like, all right, cool. But now Bojan, he left Helium 10 after helping guide them and grow them, and now he’s doing stuff with you guys, right?
Melanie:
Yeah, so Bojan is my boss.
Kevin King:
Bojan is your boss now.
Melanie:
I report to Bojan. For real Kevin, Bojan is my boss. Facts.
Kevin King:
So, let’s back that up. You co-founded this company, right?
Melanie:
Yes.
Kevin King:
And then you had a kind of like a little exit of some sort or whatever, or there was something happened. Explain that. Maybe I’m misunderstanding. Explain what happened.
Melanie:
Okay, so we haven’t done any exit, believe it or not. So we’ve been growing organically and, of course, with the incredible support of Amazon, which we started working with Amazon back in August of 2013. So we’ve just celebrated I think it was on the 12th of August we celebrated our 10-year anniversary of working with them. So we are so lucky and from there when we founded this company, really I think we have just evolved so much. But yeah, Bojan is my boss. From the point that he is my CEO, we didn’t do any exits. We just decided, with my colleague Dr. Angelos, to sort of like not take a step back as such, but we needed a fresh leadership, we needed fresh eyes, we needed somebody who was going to be able to support us. I think I don’t know, Kevin, what happens, especially after hitting 10 years in business. I think you feel like you want some sort of like renewal.
Kevin King:
Yeah, it gets a little stale. You get a little kind of stuck in your own little routine and rut. You need a fresh set of eyes and outsider to come in and kind of reinvigorate it a little bit and give you a little pump.
Melanie:
Yeah, that’s right. And, of course, as you’re aware of Bojan, he’s an incredible human.
Kevin King:
Yeah, he’s a good guy. I like Bojan, he’s a really good guy.
Melanie:
On the contribution that he did on Helium 10, we thought that it’s going to be an opportunity for us to for him to actually just support us. So we are building one of the largest integrated e-commerce platform or solution whereby we will be having all our services in it. So he’s playing a huge role on just supporting the business with taking it to the next step, because I think myself and Angelos sort of like tried my co-founder we tried to build technology and to sort of like try and revamp you know, trying to revamp text and make it sexy. That’s why we brought in somebody that knows technology. He’s going to actually help us to just accelerate that growth and that path of ours. So that’s why he came in. Now he is the CEO, he’s the guy that is calling the shots.
Kevin King:
Yeah, he’s really good on the technical side and that was a smart move by you guys to bring him in. So what you said AVASK started back in 2013 dealing with Amazon, but your background before that was in like forensic accounting, if I recall, or something our accounting or forensic accounting? Does that mean that you were going in and looking for that were cheating or what’s forensic accounting exactly?
Melanie:
So it wasn’t actually trying to look. We work mainly with insurance companies on my previous job but it was trying to find anything that could have been wrong. So forensic accounting was part of the job, but the main job was auditing. So auditing companies and also drafting financial statements and also reporting for businesses, mainly brick and mortar businesses. So we had businesses that were selling online, but e-commerce wasn’t a thing then. That’s before we founded AVASK. So when we founded AVASK, it was with the view that I had the experience already in accounting. I was carrying about I think it was 15 years experience already with me and it was with the view that. So my husband was actually finalizing his PhD and I thought do you know what? I could just take a sort of like early retirement and have 10 clients in my briefcase and travel all over the world whilst my husband is going from one country to the next teaching or working for the European Union. So everything is going to be great. I thought it was seriously an early retirement that I was taking. I thought it was very, very luxurious, because when you’re coming from a business that supports clients, you know exactly that your clients, they don’t need you to be at their site every day. You see them once a year when you’re carrying out their audit record or presenting their financial statements. So I thought life was going to be so easy and I calculated, and I did some math OK, so if I get at least 10 clients, the 10 clients are going to pay me 150K per annum, which is a salary that I was on. So life is going to be great and that’s me going to be gone. So I already had a couple of clients that I was doing self-assessment for that are celebrities in London script writers for the bill, if you’ve listened to the bill and so I thought I’ve got a couple of clients already at the size that I’m doing work for. So this is a no-brainer. So we incorporated Avast back in 2012. By the time we came in and this is so funny because we incorporated in 2012, started functioning fully in 2013. And a friend of mine who was in marketing turned around and said you know, you could get people that are going to be doing cold calling to call local businesses so that you can have them as clients. So quickly, I hired three ladies and I had no office. I put them in our home in the dining room. So what they used to do between 10 till 3, before the kids came back from school. They’ll be in our dining room calling for new business at 3 o’clock kids are coming out.
Kevin King:
Your own cold calling room in the dining room.
Melanie:
Right, right. So, within three months, we saw ourselves having 30 clients. Before you know it again, my friend Peter turned around and said this you’re going to scale this to 300,000. I mean 2012. When you’re talking with somebody and you’re talking about 300,000 and you’re coming from a job that’s 150, you’re happy, isn’t it? It’s like, let’s go 300,000 we’re going for.
Kevin King:
So how did it evolve into the e-commerce? How did it evolve into the Amazon stuff? Were you selling or did someone introduce you to an Amazon seller, because that was early days of like FBA and people going to different marketplaces and stuff? How did that evolve?
Melanie:
Yeah. So this happened around April, believe it or not. Our first clients were coming from Hong Kong and Shein, you know the clothing shop.
Kevin King:
Yeah
Melanie:
They were our first five clients that we have in e-commerce.
Kevin King:
Well, Shein.
Melanie:
Yeah, Shein.
Kevin King:
Yeah, back in the early, early, early days.
Melanie:
Correct, correct. And during those days, they used to ship their sizes, of tiny sizes, so Asian sizes and ship them over to Europe. So size 10 in Europe is like size 6 for China, but the sizes were absolutely mental and we went on a call with them and educated about what’s the difference between Asia and China, especially the people, and what is it that we do. And so that was. I would say that was the first time we sort of like encountered e-commerce, or really coming face-to face and understanding what Amazon is, because prior to that, I actually thought that Amazon was selling all those things, so they own the products that they list on their website. But I soon learned with Shein that no, no, no, they were actually launching on Amazon and we just figured things out. And then, before you know it, I was communicating with people within Amazon. I think we had about close to 25 or 30 clients. We were communicating with people on Amazon on LinkedIn to see how we could help them with global expansion. So I would say that the first between five to 30 clients are the ones that really educated us about Amazon, about e-commerce, how it works. So when we approached Amazon, we understood how Amazon worked and Amazon at that time they were in the process of setting up their global expansion team and it just became so much easier because they had one guy, Jez, who was onboarding American sellers into Europe and he was working nights, PST hours, in order to be able to speak to Americans. Within a few months we were being introduced to a team in Seattle the first global selling team of Amazon, and we had to go up to Seattle to meet them and train them about Europe, how Europe works with global expansion, and come up with some heavy stats and just a whole educational piece. I would say that piece just really opened all the floodgates of AVASK, to sort of like, have the full exposure of Amazon sellers and as well as global expansion and Amazon themselves, and we started getting leads directly from Amazon sales team and yeah, that is us made.
Kevin King:
So what’s some? Let’s talk a little bit just for the people listening. You know, I saw a stat I think it’s Marketplace Pulse put out that they did some analysis, and they said only about 1% of American sellers sell outside of the United States. They’re selling on the Amazon platform in the US. Only about 1% do. And you see people like yourself AVASK and there’s other people out there that are constantly pushing like hey, expand, expand there’s massive opportunity in these other marketplaces but so many people are hesitant to do it and some of that may be cash flow reasons, because it’s like you know, they may not have the cash to do it. Others are just, they’re just scared because the way we sell and the way taxes and organization and stuff work in the US is quite different than the way it works in Europe. Can you just explain some of the big picture differences key, fundamental? You know three or four of the big picture differences between selling in the US and selling in Europe, because there’s great opportunity over there and people just understood some of it a little bit better. Maybe they’d be willing to reach out to an Avast or someone like yourself to say help us through this process. But can you just explain a few of the differences?
Melanie:
Yeah. So I think how e-commerce has evolved over the period. I look at American sellers as the e-commerce mother. They have got a greater experience than us in Europe on e-commerce or any country in the world. Americans are the leaders in e-commerce and they’ve got that Amazon experience. If Amazon is over 25 years old, that is as old as the experience within the e-commerce sector, their experience within the e-commerce sector. Where this puts it puts Americans to be, with the experience that they have, they are comfortable with just expanding over into the US. But also I’m going to bring in before I explain the differences, I’ll bring in Chinese sellers. Chinese sellers they find that expanding over to America it’s easier than expanding over into Europe. So there is a saying in China that says that if you didn’t make it in America, the next place to land in is Shenzhen. So all those people that never made it to go to America, you’ll find them in Shenzhen for a particular reason. So same applies with this. So Chinese are sort of likely to expand more in America first than touch Europe. So if you look at the marketplace in the US, it’s very mature, whereas in Europe. It’s a fresh market and I think the main differences are regulation. In Europe everything is regulated. So, which means that you need to be compliant, whereas in the US, if you have your company or you can register as a sole trader on Amazon.com it’s easy, you get going, the KYC is pretty straightforward, whereas in Europe there is a lot that is required from a business point of view. Now, with this regulation that is in place, it’s sort of like it makes individuals that are looking to expand into another market sort of like Shein on spending a few hours completing documents that they have in their drawers or in their folders. So they look at it as if it’s too much because of the KYC that marketplaces are supposed to be conducting when you’re opening your Amazon account and when you’re looking to list your products, whereby you’re supposed to be having a VAT number, whereas in the US you might be required with an EIN number and, because it’s at home, you’ve got that, so you don’t have to, sort of like be doing fresh registrations. So I would say the VAT registration, the thought of shipping your product into a foreign country, whereby you’re thinking of customs the moment you think of customs and the document completion. That is a lot, but they forget that they actually ship products from China into the US without a problem. But the moment they think about China to Europe or US to Europe, it becomes another different kettle of fish. So I would say that there is a lot of fear among entrepreneurs to sort of like, enter new waters and Europe. Most American sellers would turn around and say I want to launch only in the UK, only. That’s all they’re actually looking at. Why? Because they’re looking at things from a language point of view that it’s going to be. I’m going to be able to answer all the questions. The moment you talk about Germany being a big marketplace, of Amazon especially, they got shocked. I don’t speak German, so how am I going to translate my products? Now, what Amazon used to do earlier days, they used to give sellers a Google Translate and, believe it or not, royalty translation was in existence at that time, but they were still giving them Google Translate, yeah, and that just messed up all the listings in all those countries. But coming back to why they are actually not expanding, there is fear. There is, I would say, time. I’m doing well in the US, so why would I want to expand somewhere else and they don’t think about duplication, that you’re going to be duplicating what you’ve got in the US into another place. They don’t think about that. And also I would turn around and say probably some sellers, but I will say it’s a low percentage, some of the sellers. The reason why they probably may be feared to expand is because of their products. They’re not fit for the market and capital; capital is another issue. Amazon couldn’t possibly tell you how many sellers they’ve got on their platforms that are selling, because everybody’s got a seller account. I’ve got a seller account. I don’t sell on Amazon. Oh well, I do actually. I sell a book. I sell a book, but you can easily open a seller account and have that money coming through on your direct debit and don’t even bother to sort of like cancel it in future. So I would say that they are. There is a lot of smaller businesses on Amazon, but the ones that sort of like are looking to scale. They are too busy focused on the platform. In the US, the differences are not.
Kevin King:
The US I think some of that’s. The US is just a huge market. You can go into the US and I think it’s like you said, it’s kind of like an effort thing. Do I put the effort? I only have so much time or effort or can only afford so much, so where do I go? Where the biggest, the biggest opportunity is, and it’s I mean. Actually, it’s China is the biggest opportunity, but most people that’s kind of more of a closed system, harder to penetrate that. But from the west, outside of China, the United States is definitely in the place. Like you said, they’re the leader. So I think a lot of people go there just because it’s so. There’s so much more depth and so much more volume, than you know everywhere else combined. Basically in the whole Amazon system. Even though Germany and the UK are big, but, like you said, lots of Europe is still. You know, I think its Greece. I just saw something like only like 15% of the population is ordering off Amazon or online or whatever, and it’s still. They’re still. You know they haven’t. They have their own little marketplaces there besides Amazon, but they’re still going to the stores and buying things. They’re still the old fashioned way a lot and they haven’t. They haven’t, they’re not with the, as technologically advanced as we are, so I think that that might be some of it. But so when someone comes to what does AVASK actually do to help a seller? So you guys, there’s VAT. For those of you that don’t know what VAT, that’s basically the sales tax you know in the United States, sales taxes by states, and it used to be where you had to individually. Nobody was collecting it, Amazon wasn’t collecting it. And then some of the states said, hey, we’re missing out on billions of dollars here. So they started especially once, like California started cracking down on sellers and Amazon says that’s not our, that’s not us, you collect from them. And then there’s Paul Raffleson and a few others got through some legislation and some laws where actually now Amazon is forced to collect the tax. But in Europe it gets more complicated because you have VATs and they’re different in all these different countries and you got to report them individually. So I think that might be just the accounting side of it to some people just scares them off because they don’t like dealing with numbers anyway. But that’s where you guys come in. You basically just make that a cakewalk for them, because you take care of all that stuff right.
Melanie:
Yeah, so a VAT is Value Added Tax. It’s a tax that is charged on goods and services, which means that if anybody that is going to be selling a product, whether at a shop or online, they need to make sure that the VAT or the value added tax is included in the value of the product. So if I go on Amazon to buy a product that costs, let’s say, £10, I expect that I am going to buy a product that is including VAT. So that VAT is going to be about. In the UK, vat is 20%, so it’s going to be £1.66. And I know that a lot of people are going to be protesting with this math’s that I’m just saying because they think it should be £2 instead of £1.66. It’s because it is included in the £10. Whereas in America, if I go and buy and this actually happened for real in LA, so I went to LA and I went to the shopping mall and I was like, oh, this is cheap. And I was picking up stuff on the shelves and I’m sort of like counting and I’m like this is great. And I put it on the counter and the lady says $300. I’m like what are you talking about? It’s supposed to be less than that. I know how to count them in accountant. And she said no, ma’am, this is. I was like your prices are wrong. Your prices are wrong that you’re marking up there, forgetting the fact that I’m actually in America. So when I’m picking up an item and I’m expecting to pay $30, it’s not going to be like that. There’s going to be sales tax.
Kevin King:
So it’s like as an example, like if it’s let’s take $10 as a good example $10 in the US if you’re in California, I don’t know what the exact rate is In Texas it’s 8.25%. So that $10, you add 8.25% onto the 10. So that’s going to mean you’re paying $10.83, basically when you round it up. But in the UK it’s not. If it’s 20% of that, it’s not 20% of the $10, it’s the price is actually $8 and whatever the math works out, 42 quid or whatever. And 20% on top of that equals 10, right?
Melanie:
Yeah, so it should be the value of whatsoever that you’re selling this microphone. It should be the value of whatsoever that you’re selling this microphone. It should be when I’m looking at online and Amazon. It should actually include VAT on it, so, which means you need to be able to mark it up. Now somebody is going to turn around and say, oh, but that means I’m going to be expensive as compared to the others. No, no, no. In Europe, you know, after 2016, when there was a major crackdown on the sellers that were not compliant and there was an outcry in most sellers, especially American sellers and UK sellers, that, oh, we’ve got all these companies that are coming in putting us out of business. They’re more competitive than us. That doesn’t work anymore, because everybody’s playing on the same level field, because everybody is required to be paying VAT. Name level filled, because everybody is required to be paying VAT. Now, if the marketplaces find you that you’re not being compliant or you’re not paying VAT, they can actually shut down your account. That is immediately, and they’ll be fined by the tax authorities. So it is so serious on compliance that it’s just. It’s not like other countries whereby marketplaces are required are legislated, so they’ve got rules that they need to abide by.
Kevin King:
Yeah, there was a period there where you’re saying where Chinese sellers were not, it wasn’t just Chinese sellers, but a lot of them were not paying the VAT, so they were able to charge less and have a competitive advantage. Then the EU and the UK cracked down on that and put some new rules and regulations in place to prevent that. There was a period so that some people may still think that’s going on. But now too, you pay a lot of people to understand this. When you ship something in, you’re actually paying the VAT. When you like a portion of it. You can almost pay like an advanced deposit in some ways. When you bring it in right, that counts against what you collect later. Can you explain how that works?
Melanie:
Yeah, so that is import VAT and also there’s duties. Duties in the US, and the American that is watching this will know that they pay duties anyway to bring in products into America. So same applies in Europe. You pay that, which is duties, and, depending on the HS code of the product that you’re actually shipping. And then you’ve got import VAT. Import VAT, it’s a tax that you pay when you’re bringing in the products into the country, so it’s based on the cost of the product, which means that, but that is refundable in your VAT return what they’ve done.
Kevin King:
That applies kind of against the VAT, because that import VAT might be on the cost. to say, that $10 item is three bucks, so you pay an import VAT of 60 quid or something on that. But then when you collect the VAT on the 10, maybe you’re collecting whatever you said, a dollar or a pound, 50 or whatever the number is. So you get that 60 taken off of that. So you only owe the 90. That’s just a very simple, clarified example, right?
Melanie:
That is a simple position, but also the UK, France and Netherlands. Netherlands has got what’s called Article 23 when you’re shipping your product so, which means the import VAT is deferred anyway, so you don’t pay it. Okay, and it gets recognized on your transaction on your VAT return. But in the UK and France we’ve got what’s called PVA, which is Postponed VAT, what that does, or Postponed VAT accounting, what that does. It means that you don’t have to pay that VAT at shipping point, so, which means it’s deferred right and that is being recognized in your VAT return. So in most cases for the sellers that are already selling, they won’t even outlay that amount of import VAT because it’s postponed. It’s being made visible on your account on your VAT return. That helps massively on cash flow. So, which puts us in a position that the tax authorities have sort of like tried to make the trade with Europe very, very easy. In previous years you had to pay that import VAT when you’re shipping. The sellers that used to do that that started trading earlier on, before the changes, they can tell you that they had to pay the import VAT. But what we see, Kevin, just whilst we’re talking about this, what I see still a lot of sellers that are shipping through Germany, whereby Germany is still using the olden days system of collecting import VAT or of clearing goods at customs, which means that it is expensive to ship to some certain countries in Europe. You’ve got countries like Spain and Italy. I would turn around and say I would never ship through those countries, especially if I don’t have an entity incorporated in those two countries, because it means that I’m going to have to wait for years to get that import VAT collected back. So the countries that I would say that if anybody is looking to expand over into Europe, I would look at UK for just the UK, because we did a Brexit. But then if I’m looking to do to ship into other European countries, I would definitely utilize Netherlands, which has got the world class state state-of-the-art customs department and also, as well as France. Those are the two countries that I would be looking at shipping to. But going back to sales tax in the US, of course, there are rules that sellers need to abide from, and I think it’s more stricter for non-American sellers on sales tax reporting, or making sure that you know, even if you are not paying the tax but you need to, or Amazon is collecting it, there is a report that you need to make sure that, as a foreign seller, you are actually complying towards what you are actually filing. Now the interesting thing is that if you are not compliant and you’re selling also in the US, is that the tax authorities they communicate. Or if you’re selling in Europe and they feel like you didn’t pay the right amount of that and now they are looking at chasing you to get their money back, they can actually communicate via the IRS. So, which is why, for us, we are there in order to mitigate those problems, so that you don’t get a call about Europe through via the IRS. Legally, the IRS actually needs to respond when another tax authority is sort of like calling up against somebody who’s not compliant. So lawfully. The IRS will send you a letter saying that, listen, the French tax department has come to us and told us that you are owing X amount of money. So, yes, get VAT registered, but also remit the money back to the tax authority, to the rightful owner.
0:33:31 – Kevin King:
I’ve had. I’ll tell you a quick little story about my experience between the US and Europe with tax. It doesn’t have to do with selling on Amazon. So two years ago, in 2022, I was at my wife at the time or divorced now, but my wife at the time and I were in Paris at Howard Ty’s mastermind. He did a mastermind like an old castle outside of Paris and we went and we did some shopping in Paris and bought some Cartier and bought some nice clothes and probably $30,000 worth of stuff that we bought, and we took all the labels off. We did everything you’re supposed to do, you know, took all the bags out. But then here’s old Kevin, like yeah, I can get my VAT back as a tourist and when I go to the airport I can scan my little receipts you know they give it to you at Louis Vuitton or whatever. Scan my receipts and I get, I don’t know. It’s all right, $3,000 is to be credited back to your credit card or whatever. I’m like, all right, awesome, we land in the United States in Chicago. We were flying Paris to Chicago and in Chicago they were doing a little sting operation and they, instead of now in the US, used to you filled out these blue forms. When you’d arrive in the US. You’d hand, you know, with a pen, you’d fill out and declare everything and they kind of got away with that. You do it on machines now. But they were passing out the blue forms and I didn’t have time to fill it out because there was no line. Ladies like, don’t worry. She asked me a few questions what are you bringing back? It’s a thousand dollars worth of shoes or something. So she wrote a little code on the top. Well, that little code was like yeah, bs, check this guy. So we get up to the, the counter and they’re what do you got? My wife in the meantime was like Kevin, just be honest. So I was like so I get up and I said well, we have like about $5,000 worth. He’s like sure, it’s like yeah. So I said he’s like go over here, line lane one, follow the yellow line. So we go over there. They asked me again. I said yeah, about $5,000 worth, hundred bucks each in. So I figured I’d pay a little bit of tax. Um, but then they opened up my, my briefcase and here’s all the damn VAT refunds tickets from the machine sitting right on top. And they didn’t even look at any of the other suitcases. They just took those and like $5,000 yeah, buddy, right, it’s $30,000. But they added it up. Their calculation was $40,000 because they did some funky math know, they’re not accountants or anything and they said you have two choices. We’re confiscating it all, or you can go pay a penalty. The penalty is 100% of the value, but since you cooperated, we’ll let you get away with paying $7,000. So I had to go pay $7,000 in order to leave with the stuff. And then they put me on a shit list. They said you can’t have global entry. If you have it, we’re taking it away. I didn’t have it anyway. They didn’t take away my TSA pre or any of the other stuff within the US, just the global entry. And then for the next, they said you’re going to be plan extra time for every trip that you take from now on, international trip that you take, because you’re going to get pulled over.
0:36:20 – Melanie:
No wonder I haven’t seen you for such a long time.
Kevin King:
How often does that? How long does that last? And they’re like, well, we can’t tell you. But I figured I did a little bit of research and it turns out it’s five entries or a year, whichever. And so I did. After my fifth entry it quit happening. But for the next five entries after that I had to plan in an extra three hour layover because I knew that I’m gonna get pulled over. They’re gonna search the bags, yeah. So, you don’t want to mess around when it comes to VAT. You know a lot of people come in and don’t declare stuff and like, oh, I’ll just say, but now I’m a good boy, I declare everything. If I buy something, I declare everything. And yeah, and it turns out I researched it they were having a competition between Dallas, Chicago and New York to see who could confiscate the most stuff. And it was a competition for flights coming from Paris and Milan, because those are the two most common ones that have a lot of high-end designer stuff. And it turns out that, just like what you just said, where you can come back to the IRS, that’s don’t take that lightly, what Melanie said because those machines in the Paris airport and Charles de Gaulle actually tie into the US customs so they knew in advance that I was. I had actually done refunds and they knew that I was bsing. So, they don’t tell you that, but they actually know the number and so they could pull up on the computer like, look, he got these refunds. Let’s pull him over and see if he’s honest or not.
Melanie:
I’ve been working with the UK tax authorities for, I want to say, 21 years. I’ve gone, I’ve represented cases in court. I have represented clients whereby the clients they’ve said they didn’t do anything wrong and you discover you get embarrassed with the tax auditors that actually he did something wrong. Now my take is with the law and this is just anywhere in the world. When the tax authorities come for you, there is a reason. They never make a mistake. They never make a mistake. So I was doing an audit with the clients that we discovered that he wasn’t disclosing all bank details or sorry, bank statements, so, which meant that we were doing an audit and filing for this, and he had all the other transactions that were going on a different bank account. And I turned around and I was so proud I was like got all the cases in front of me, right. This is what my client is actually doing and he’s as clean as everything. Every piece of amount that is there has been audited, is correct. And the auditors were like Melanie, Melanie, Melanie, you are naive. You are naive. This guy is got these other bank accounts. Did you know about them? I was so disappointed. I was so disappointed that’s one lesson that I learned that when they come for you, they don’t come for you because there’s no unnecessary sleep sniffing. They don’t have that time so, which means when they are knocking on the door, there is something, just do a disclosure straight away. And it’s so interesting that and I know that system and everybody goes through that. So at the airport in the UK you’ve got red, and you’ve got green, red you are declaring, you’re saying, yeah, I’ve got something there. And then you’ve got the green that says go through now. So people of color. My daughter passed that. We passed one a few weeks ago in Heathrow. My daughter turns around, says typical. I said, typical, was it’s a person of color that has been, uh, stopped on the site. I said let me just tell you something darling Texas got no color it’s color green. Texas got no color if you’ve done something wrong you’ve done something wrong. You’ve done something wrong. This guy is on the red zone. It’s either green or you are red. If you’re on the red zone, that is danger, so they will pick you up. It doesn’t matter who you are. It is as simple as that and for me, that’s one thing that I would say. I’ve got respect for the Texas team because they will not pick you up for literally nothing. But I would say I’ve got respect for the tech system because they will not pick you up for literally nothing. But I would say that if somebody has actually been picked up for not disclosing sales which is something that we actually come across a lot, whereby where Amazon has got stringent rules on compliance people then sell on their private websites or they’re going to be selling on Shopify and get sales from other platforms in the country which is great, by the way that if you are an American seller or you are expanding over into Europe, look at Amazon, but also look at the national, local platforms, because sometimes others they do better than Amazon. I’m going to make an example, in Poland, you’ve got Allegro, you’ve got City Discount in France. Amazon is not as strong in those two countries. So what do you do? You launch also on the local platforms. You get only one VAT per country, so you could sell on 10 platforms in that country, absolutely fine. But Amazon is the one that is very, very strict because you know they’ll be fine if somebody is actually not compliant, so they make sure that everybody that’s trading on their platform, everything is clean. Now for the sellers that are looking at expanding into Europe, double up, double up. Launch on local platforms that are doing better than Amazon. So I would turn around and say take, for example, TikTok. You know where we all advocate on launching on Amazon. It’s going to Amazon. Yes is platform of choice is number one. But TikTok if TikTok is in your country, if you’re launching here in the UK, you know, and TikTok is available. They’re looking to launch in Spain very, very soon. I think it was planned for 2025, but I think it’s going to be in 2024. So I would say that definitely launch on the local platforms, because that’s going to help you massively to increase the sales of your business.
Kevin King:
Now AVASK doesn’t just do help with that. I mean you take a lot of this pain, point out and make sure everybody’s compliant, help people get set up with it, do all the reporting, make sure everything is clean. But you also do a lot more than that. You do help them with compliance, making sure that they’re compliant. You help them in the shipping area. Can you talk a little bit about the other things that AVASK does, the whole big package of things how you just make it really easy for sellers who are thinking about expanding internationally to do that.
Melanie:
It takes some of the stress off of them. Yeah, yeah, thank you, Kevin, for that. So we’ve built a suite of services and some of those services that have been graciously been introduced to us by Amazon to try and sort of like solve some of the pain points that they see with expansion, with sellers not expanding over into the UK or Europe. So we talk about customs and shipping, which is one of the biggest pinpoints, and I think if anybody is looking to expand or any entrepreneur in the US, they sort of like just look at first shipping and customs. How is that going to be impacting me? They look at then VAT, which is obviously one of the main ones. Now we know we’re living in an era whereby in the UK we’ve had about a couple of days of summer. So global change, the climate is not great and everybody is looking to be making sure that we are getting more carbon neutral if that’s going to happen in our lifetime. So they’ve introduced now, and I think America as well has actually introduced it, but it’s not being pushed as strict legislation. It’s an EPR, which is Extended Producer Responsibility. So that is an eco-contribution towards the products that a seller is putting into the environment in order to make sure that the product is actually going to be recycled and it’s not going to be ending into the sea. So we’ve got the value-added tax in order for you to be VAT compliant. We’ve got customs and shipping as well. So, again, making sure that the documentation, the HS codes, the products are being charged correctly. And then we’ve got the EPR, which is the extended producer contribution, which is for, again, to make sure that we provide the end-to-end solution for anybody that is looking to expand over into Europe. If we don’t provide a service like translations and all that. We’ve got partners that deals with that EG Wilt Translations. They can support you with that. I would say that it’s going to be one of the most important piece as part of expansion that you don’t list your product in English in Germany. You don’t list your product in English in France, so make sure that you list and you localize them into the correct language. So we provide this whole suite of end-to-end compliance solution for anybody that is looking at expansion. And the reason why we did that is because we’re just trying to really deal with the pinpoints and make the expansion much more seamless than what it is for many people that are sort of like not looking to expand.
Kevin King:
You said you’re building that into a SaaS tool. You said earlier you said you’re building that into a SaaS tool. You said earlier You’re creating some sort of tool that’s going to help sellers self-manage some of this along with your assistant. Is that correct?
Melanie:
That’s correct. So that’s what my boss is working with our tech team at the moment to sort of like build a whole end-to-end compliance platform in order for you to be coming into one engine and choose the services that you need in order for you to be able to comply, to be compliant. Now we always say at AVASK, yes, it’s going to be SaaS, but you know, saas has got its own disadvantages when it comes to compliance. So, which means that you need to go more tech enabled, have the person that is going to be able to support you and guide you throughout the whole steps of the journey of being compliant. And that’s one piece that I would say. As a company, we don’t want to lose that because we’re still living in that age that you know. There’s AI, there’s so much of that that we can actually introduce, but people want to speak to people at the end of the day. So I would say, especially for the first launch stages, definitely there will be a guide, there’s somebody who’s going to be taking you through the whole stages of launching.
Kevin King:
But there’s something, some big changes happening right now in Europe, right, Something that’s going to like really some people need to like pay attention to. That’s happening right now. Can you talk about that a little bit?
Melanie:
Yeah. So, oh God, Kevin. It’s been so busy, we’ve been prepping for a few months, but finally the day has come. It’s like we’ve been waiting for the groom or the bride all these months. So what’s happening is Amazon. When the tax authorities in Europe were clamping down on non-compliant sellers on its platform in the UK and Europe, so Amazon decided that they were going to be launching what’s called the VAT on Amazon. So Amazon is not a tax provider. And they said, right, we will bring in tax experts about four companies, including AVASK, to be the ones that are working to support those businesses that are launching for VAT on Amazon. So, from a seller central point of view, as a seller, you would come in and say I’m looking to launch in Europe and then bump the screen for vat on amazon coming, register for vat, choose the agent that you want to work with you, choose AVASK and we complete the information on there on your behalf. So, which means we are working at the back of the engine, of our Amazon engine, right to support you, the seller, but the main communicator of that platform is Amazon staff first. Those are the ones that are sort of like facing you. At the back. It’s the tech agents, like AVASK. So that program is coming to an end right here. It’s been a fantastic program for us. We’ve learned a lot on how Amazon works at the back. It’s been great supporting sellers. So, which means that we had a mask. We had a mask on because it appeared like Amazon was the ones that was doing everything, because the program was being run by Amazon. So Amazon is closing that program. Now notices are going out to sellers, so sellers are getting notification to tell them that the program is no longer going to be existent, which puts them in a position that they need now to contract directly with AVASK or another agent that they want to support them really with their compliance and just moving forward. So there’s a huge advantage there for sellers and I think probably sellers are going to be panicking during this time. It’s like what’s going on and everybody’s so uncertain. I thought Amazon was going to be helping me. Amazon still cares about compliance and they want to make sure that everybody that is being deported from their platform to our platform remains compliant, right? So I would turn around and say and from our point of view, those sellers that are being deported and coming to our platform. They’re going to be running NPS scores on us to make sure that those sellers are compliant and we are continuing to service them, and I wouldn’t be surprised if maybe we are required to report on the sellers that are not being compliant, that think that, oh, that’s great, amazon is no longer there, so we’ll just close the door and go away and that’s it. There will be checks that are going to be done and if they find that you are not compliant, then they remove you off the platform. It is as simple as that, but it’s big news for sellers and I think also people are going to be worried, as far as like. So what’s going on with Amazon? What’s going to happen? Amazon wants to focus on what matters most, which is being an e-commerce platform and passing over all the headache and all the regulation changes, as you can see that there is a lot of regulation in Europe, but also that regulation is the one that gives people opportunities, because those companies that don’t want to be compliant, it means that they’re going to actually not launch in Europe. But for the businesses solid businesses that wants to scale, then it’s a huge opportunity for them.
Kevin King:
AVASK oftentimes sponsors events with Helium 10, you know, throughout Europe you guys have done some co-sponsoring of Helium 10 quarterly meetups in Spain and other places in Europe, and then Helium 10 is actually on. You said, like the day before on the. If you’re listening to this in time, or if you’re on the airplane right now heading over to Seattle on the 16th I’m speaking along with Destany and Jeff Cohen at Helium 10’s quarterly event on the 16th it’s free to come. If you go to Helium10.me/Seattle I think it’s H10, h10.me/Seattle you can come to that event. I’m hosting a dinner with Athena and some other people on Tuesday night, the 17th. There’re several other parties that are going on that people are doing, so it’s a great place to not only meet up with people like yourself at the AVASK booth, but also to network and just to have a good time, and so I encourage everybody. If maybe you’re listening to this after the fact, mark your calendars for next year or you could come. Amazon does a second event called Unboxed, and it’s more. There’s a lot of sellers at this event, but there’s also a lot of agencies, a lot of the advertising agencies, a lot of those type of people. That’s normally in New York on Madison Avenue, but this year it’s in Austin in October and in October, if you’re coming to that event, if you’re listening to this and coming to Amazon Unboxed, which is another 2,000 people event, it’s October 14th to the 16th in Austin. I’m throwing a Halloween party on the night of the 14th with Amy Weiss and Chelsea Cohen. That’s going to be really, really cool as well. We got a really it’s an experiential party that we’re doing. It’s going to be just over the top. So mark your calendars if you’re going to be in Austin for that.
Melanie:
Can I just say one more important piece Amazon does an equivalent one, an equivalent accelerator in Shenzhen.
Kevin King:
Oh yeah, that’s right.
Melanie:
And Hangzhou once a year, whereby there’s about, I would say, around 15,000 Amazon sellers in that event. If you don’t speak the language, honestly, these phones they’ve got bloody good AI that you could actually get translation done live with them, and I find that there is a lot of information that is actually packed. So the things that are going to be happening in 2025, I feel like I get them at that event in Hangzhou or Shenzhen, that Amazon house, so I would definitely look at getting that one. I’m going to give you a date, Kevin, and maybe you can put on your Facebook group.
Kevin King:
That’d be great.
Melanie:
But yeah, it’s happening in December in Shenzhen. We had a great time last year in December. A lot of stuff sort of like that happening in 2020, 2024, it was announced in 2023, which is amazing.
Kevin King:
May have to make it. I’m going to Singapore in November, but I may have to once. Yeah, I’d be interested in that. It sounds like an event that I need to be at, 15,000 in Shenzhen. Yeah, that sounds like I need to be there. Yeah, that sounds cool. Well, if people want to reach out to AVASK or learn more about AVASK or contact you or get some help with their expansion or just have some questions, what’s the best way for them to do that?
Melanie:
Yeah, I would turn around and say shoot me an email which is melanie@avastgroup.com, or go to our website and complete a contact page and I know people do not like that, but try it which is www.avaskgroup.com.
Kevin King:
A V, like Victor A, like Apple S, like Sam K, like King, so AVASK For those of you listening that are like what were they saying? How do you spell that?
Melanie:
Can I just start? What were they saying? How do you spell that? Can I just start? So it’s wwwalphavictoralphasierrakilo.com.
Kevin King:
That’s the military way to say it. There you go. Awesome Melanie, this has been great. It’s always a pleasure to speak with you and to hang out with you. Always a lot of laughs, a lot of fun. I really appreciate you coming on today and sharing with us.
Melanie:
Thank you, take care. Thank you so much for having me lovely talking.
Kevin King:
Always a blast speaking with Melanie. Always have fun, have some good laughs. She’s great. If you have a chance, make sure you check out A Basket either Amazon, accelerate or any of the other shows that they sponsor or reach out to them. They’re a really good company to work with. I vouch for them. If you’re looking at international expansion or just have questions or maybe you’re already working with somebody, it’s still worth a shot to give them a call and see if they might be able to help you, especially with the software that Bojan’s working on. I think that’s going to give them a major advantage and maybe make life easier for everybody. So that’s going to be pretty cool to see how that evolves and that comes out. We’ll be back again next week with another awesome episode of the AM PM podcast next Thursday. Every Thursday is a brand new episode. If you’ve missed some, make sure you hit that subscribe button. Make sure you go back and check out some of the past episodes, because you’re missing some gems and missing some really good stuff. And before we leave you today, I’ve just got a few words of wisdom for you. You know, your personality is the sum of your quirks. If you don’t have any quirks. You don’t have any personality. Your personality is the sum of your quirks. Don’t try to be normal, don’t try to be like everybody else. Be a little bit quirky, be a little bit different, and that’s what’s going to set you apart. Talk to you next week. Bye.
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The post #412 – Expanding Your E-commerce Business into Europe with Melanie Katsaris’ Tax & Compliance Expertise appeared first on AM/PM Podcast.
