What are the tax and legislative hurdles that come with trading in Europe?

Europe accounts for a significant proportion of the global ecommerce market - research company Forrester expects it to generate €128bn (£110bn) in 2013.

A recent survey of European retailers by ecommerce provider ChannelAdvisor found that 71% are at present actively selling online across Europe.

However, it says many are unaware of the rules in place for continental trade in Europe and the potential fines and legislative retribution that can result from not understanding the tax and VAT implications of cross-border trade. But, while the tax rules are complex, knowledge of these requirements should empower retailers to expand rather than deter them.

Retailers are required to start charging local VAT rates on products sold internationally once they reach the tax threshold implemented by local authorities. The issue is that thresholds vary across EU states. Retailers should not assume that professional third-party selling services will oversee the tax process for their company.

These services, such as Fulfilment by Amazon, lend support to online retailers through stock management, distribution and customer service but retailers are responsible for the calculation, reporting and payment of their own taxes.

Products are generally VAT-free until revenue hits €35,000 (£30,150), which is changeable dependent on the country, with the specifics of the item being sold also affecting whether tax must be paid.

There are many variables to consider and retailers can fall into the trap of viewing the EU as one commodity when, in fact, each country has its own individual legislation and tax regulations.