Irish SMEs are export masters - report

Ireland is also on top for cross border sales, with 17% of Irish SMEs selling internationally, according to a recent survey issued by market research agency Eurostat, irishexaminer.com reports. The EU average is just 8%. The SMEs have also taken advantage of the EU VAT tax regulation.

The old regime obliged e-exporters to charge their overseas clients the VAT rate applicable to the place of business — in our case, Ireland. As Ireland has one of the highest VAT rates in Europe, this was a disincentive to e-exporting from Ireland.

From 2015, digital products were taxed at the VAT rate applicable in the consumer’s country of residence, rather than in the seller’s. The rules were introduced to stop companies that trade online — be they multinationals, like Amazon, Apple and Google, or start-up businesses — from routing purchases through low-VAT countries, such as Luxembourg.

Back in October, 2014, when the new EU regulation was mooted, critics saw it as a new Brussels’ tax grab that would shut thousands of micro-businesses. However, Finance Minister Michael Noonan argued that the new rules would provide a level playing field.

The size of the online market in Europe has attracted many international corporations. US eShop has a business based on the premise that European shoppers want to buy low-cost items from US websites, but are put off by high shipping costs. It provides the means to consolidate small volumes of products from multiple US manufacturers and ship them to a centre in London, UK from where local couriers do the ‘last mile’ delivery.

The location of distribution centres is a critical consideration for any new Irish e-export business, especially as the major online retailers, such as Amazon and China’s TaoBoa, are constantly cutting delivery times. In 2009, TaoBoa introduced same-day delivery, meaning shoppers placing orders by 11am can expect delivery by 3pm, thanks to a network of motorcycle couriers. Amazon has unveiled plans for Prime Air in the US, a delivery system that uses small drones to get packages to customers in 30 minutes or less.