On 3 December 2018, the so-called Geo-blocking Regulation will become effective in Estonia (and elsewhere in the European Union). It addresses the unjustified restrictions based on location, residence and nationality that is taking place within the internal market of the European Union. According to it, clients must not be offered different prices and terms and conditions if they want to purchase products or use services from another country in the European Union.
Questions regarding e-shops
What areas are affected by this?
The requirements resulting from the regulation apply on cross-border sale of goods and services. Transactions made within the local country (from local seller to local client) continue as before.
How does this affect web stores?
In principle, web stores will be on an equal footing with regular stores. Just like in a regular store, tourists will no longer be directed to a separate entrance nor handled under different sale or payment terms and conditions in comparison to the locals. And just like a regular store, the owner of the web store can decide which payment options to use and which delivery method to offer to the client.
Will I now have to start using all international payment options?
No. The web store offers the payment solutions of their choice and the client who wishes to make the purchase shall decide whether to use these or not.
However, if the web store accepts a VISA card or Mastercard issued in Estonia, they shall accept payments made with a VISA or Mastercard issued in any other EU country. However, if the merchant is currently using bank link payment options, for example, they are not obligated to start offering credit card payment options.
What does this equalisation mean?
It will become illegal to redirect a client from another country automatically and without their prior consent to a page adjusted for that country where there is a different selection of products and different prices. For example, it will become forbidden for an Estonian web store to offer a wider range of products on an .ee page compared to a .fi or .lv page and automatically redirect clients with Finnish or Latvian IPs to the pages with products aimed at their countries. In this case, Finnish and Latvian clients shall be able to access the web store with the.ee domain.
How will I deliver the goods to every corner of the EU?
The regulation does not obligate the web store to deliver goods to all parts of the European Union. But if a foreign client agrees with the existent delivery methods offered by the merchant—e.g. picking the goods up themselves—then these must be made possible for them.
The delivery methods at my web store are: parcel machine, courier and self pick-up. Does this mean I will have to send a parcel to Spain or Romania, if the client orders from there?
It would be reasonable to explicitly describe the regions within which you offer your delivery services. Delivery conditions have to be equal for all clients regardless where they order from. If the web store offers to deliver goods to parcel machines within the Baltic countries, courier delivery within Estonia and self pick-up at the seller, then these options shall be available to all clients regardless of the location they made their delivery from. A client from Spain or Romania shall decide for themselves whether to purchase under these terms and conditions and arrange the pick-up from the Baltics themselves.
What happens if a client that makes the order from a foreign country chooses self pick-up?
Then they are themselves responsible for receiving the product (e.g. by authorising someone from Estonia or coming here themselves). It would be reasonable for the seller to stipulate explicitly in the terms and conditions how long the goods are stored at the seller’s to prevent unreasonably long storage times. The same applies to purchases made from Estonia for which self pick-up is chosen.
What happens if a client wishes to return the goods? Will then the rules of Estonia or the country of residence apply?
According to the Consumer Protection Act, it shall be determined whether it is an instance of active or passive sale. If in the abovementioned example the Spanish client goes to an Estonian page and makes the purchase there, then this is an instance of passive sale. However, if the web store has created a website in Spanish, this means they have marketed their product or service on the Spanish market and therefore, have to have understood the local consumer rights and take these into account. In addition, the stipulations of the passive sale agreement concluded between the manufacturer and trader that contradict the obligations of the regulation are void.
I have a small web store exclusively in Estonian. Will I now have to register as a VAT payer in all EU countries just because there is a chance that a client from another EU country may make a purchase at my web store?
No. Distance selling limits are in place according to which you have to register yourself in your home country. You can read more on the cross-border VAT rules and limits at the EU information page: https://europa.eu/youreurope/business/taxation/vat/cross-border-vat/index_en.htm
When will the new regulation become effective?
The new regulation will become effective as of 3 December 2018. After this date, it is illegal to unjustifiably discriminate against the client on the basis of location, nationality and residence, and this can be punished with a monetary fine of up to 32 000 euros. In Estonia, the implementation of the regulation will be monitored by the Consumer Protection Board.
Can I buy goods and services from all web stores in the European Union as of 3 December 2018?
Yes, but only if the payment solutions already offered by the web store are suitable for you. If the web store has thus far only offered local bank links, they have no obligation to start offering bank links of foreign banks.
However, even if the payment method is suitable, you will have to make sure the delivery method is acceptable for you. A web store operating in a foreign country has no obligations to deliver goods to your country. Before making the purchase, you will have to assess whether the terms and conditions of delivery are suitable for you (e.g. high delivery fee, limited delivery area or readiness to pick the parcel up yourself, if necessary).
The web store offers delivery only within their country. This has no use for me.
This is the principle of freedom to conduct business and freedom of contract, i.e. the choice of the trader which delivery methods to offer and the choice of the consumer whether to make the purchase under the terms and conditions offered.
The web store of the foreign country is in a language I do not understand.
The web store can choose for themselves which languages to use. Therefore, it is not for the consumer to demand that a web store should be available in all languages of the EU (or in official languages of the EU). Today, web browsers (e.g. Chrome) offer literal translation of web pages.
How can I know whether a web store is from the European Union or not?
The domain of the web page (e.g. .ee, .lv) will indicate this. You can find the list of used top-level domains at: https://en.wikipedia.org/wiki/List_of_Internet_top-level_domains