I sent an email to the Europa Advice as my shop is based in Europe and my target customers are in Europe:
My email:
HelloI have a few questions regarding starting an online Dropshipping business in Malta.I basically would use Aliexpress in China as supplier of small **** related items, eg. mugs, spoons, toys, postcards, and other items (no electronics and no clothes, no perishable goods). I would like to know what rights I have as a seller regarding returns and refunds as it seems that only consumers are protected by the EU consumer law. What if consumers are trying to scam me, by ordering loads of products, then changing their minds and then requesting returns. As per EU law I have to refund them. This could seriously make me broke. How could I protect myself? Is there a way I could mention in my returns and refund policy that I will only accept returns for faulty goods and that I am not responsible for lost items during shipment? Consumers could say they never received the item... I had some horrible customers in previous roles and learnt that there are evil people out there. How can I as a seller be protected in the EU? I also would like to know how VAT works, as I was told by business first in Malta, that I can have a profit of 35k eur per year and so do not need to add VAT to my products. On your website however I read that when i hit that 35k threshold in another country, I need to add vat...which rate would that be? Unfortunately I do not have the finances to afford a lawyer or accountant, hence I send you all these questions. People always tell me not to think too much and just start, but I want to do it properly and cover myself. I thank you for your help with this. Kind Regards, Stef
Their answer:
Dear Sir/Madam,
Please find below the reply to your enquiry. Please note that the advice given by Your Europe Advice is an independent advice and cannot be considered to be the opinion of the European Commission, of any other EU institution or its staff nor will this advice be binding upon the European Commission, any other EU or national institution.
Thank you for contacting Your Europe Advice.
EU consumer law sets out a number of requirements aimed at guaranteeing consumer protection in business to consumer (B2C) transactions. As a business/trader you will need to provide certain information to your customers in a clear and understandable format as set out in Chapter III of the EU Directive on consumer rights and explained here:
https://europa.eu/youreurope/busine...merce-distance-selling/index_en.htm#ecommerce.
Particularly relevant to your query is the consumer s right of withdrawal as set out in Article 9 of the Directive. This gives consumers a period of 14 days to withdraw from the contract ( cooling-off period ), without giving any reason and without incurring any costs, except for instance, supplementary costs for returning the goods (see Articles 13(2) and 14 of the Directive). Therefore, your customers have the right to withdraw from the contract and return the goods purchased and you would have to refund them. Article 16 of the Directive sets out a number of exceptions to the right of withdrawal, for example, if the goods are made to the consumer s specifications or clearly personalised. Outside these exceptions, you cannot remove this right through your terms and conditions and moreover you must actually provide your customers with information on their right of withdrawal as otherwise their right will only expire 12 months after the end of the initial 14-day withdrawal period (see Article 10 of the Directive). Similarly, you cannot exclude your liability for lost items as delivery is one of the key obligations placed on you as the trader (see Article 18 of the Directive) – you may however have recourse to the delivery service provider you have contracted.
As mentioned in your query you also have obligations should the goods delivered be faulty or non-conform.
As regards VAT, note that EU countries use different types of VAT rates. For EU-based companies, VAT is chargeable on most sales and purchases within the EU. You can consult the rates in the different EU countries here:
https://europa.eu/youreurope/business/taxation/vat/vat-rules-rates/index_en.htm but we also advise you to check the latest rates with the local VAT office.
Further information on VAT rules and rates is available here:
https://europa.eu/youreurope/business/taxation/vat/vat-rules-rates/index_en.htm
You have different VAT obligations depending where you buy from or sell to. For example, if you sell a product to an EU-VAT registered business operating in another EU country, you do not charge VAT on that sale. If the same product is sold to the final consumer within the EU, you may need to charge VAT at the rate applicable in their country. You can find out more about the rules that affect you here:
https://europa.eu/youreurope/business/taxation/vat/cross-border-vat/index_en.htm
The VAT thresholds in the different EU countries are available here:
https://ec.europa.eu/taxation_custo...at/traders/vat_community/vat_in_ec_annexi.pdf . If you sell below the threshold for the EU country in question you do not need to VAT register. If you sell above that threshold you need to register for VAT.
Should you need further information you can contact the Maltese authority for VAT through the contact form available here:
https://cfr.gov.mt/en/inlandrevenue/contact_us/Pages/Contact-Us.aspx
Finally, you may also be interested in Consumer Law Ready - an EU-wide programme, offering free training courses in consumer law for micro businesses and SMEs. You can apply to attend a training course to ensure that your business is Consumer Law Ready. If you prefer to learn at your own speed, you can sign up here
https://www.consumerlawready.eu/SME/sign-up to access educational material. You can then complete an e-test and validate your learning with a certificate.
Further information:
- Consumer contracts and guarantees:
https://europa.eu/youreurope/busine...rs/consumer-contracts-guarantees/index_en.htm
- Consumer rights when shopping:
https://europa.eu/youreurope/citize...mer-rights/index_en.htm#changed-mind-distance
- Consumer Law Ready Portal:
https://www.consumerlawready.eu/SME/public-page
- VAT:
https://europa.eu/youreurope/business/taxation/vat/index_en.htm
- VAT General information, Malta:
https://cfr.gov.mt/en/vat/general_information/Pages/default.aspx
Legal references:
- Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees:
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:31999L0044
- Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights:
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32011L0083&qid=1403274218893
- Subsidiary Legislation 378.17, Consumer Rights Regulations, Legal Notice 439 of 2013:
http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=12140&l=1
- Directive 2006/112/EC on the common system of value added tax:
https://eur-lex.europa.eu/legal-content/en/ALL/?uri=CELEX:32006L0112
- Chapter 406 of the Laws of Malta, Value Added Tax Act:
http://www.justiceservices.gov.mt/DownloadDocument.aspx?app=lom&itemid=8872&l=1
We hope this information is of assistance to you.
Yours sincerely,
Your Europe Advice
