Entering the EU market is a promising opportunity for Ukrainian manufacturers looking to scale their businesses. European consumers value the high quality, eco-friendliness, and competitive prices of Ukrainian products. However, a successful launch requires considering legal, tax, and operational aspects, as well as choosing the right promotion strategy.
Legal Framework for Entering the EU Market
To operate in the European market, it is important to establish a solid legal foundation, including company registration, compliance with quality standards, and tax obligations.
Company Registration in the EU
A registered company in one of the EU countries facilitates logistics, enhances customer trust, and simplifies taxation. The choice of jurisdiction depends on tax policies and the business climate:
- Estonia, Latvia — allow not paying corporate tax if funds remain within the company.
- Poland — convenient for logistics due to its central location.
- Cyprus — offers a low corporate tax rate (12.5%).
- Germany, France — have stable economies but require more rigorous accounting.
- Netherlands — attractive for international business due to favorable tax agreements.
Compliance with Quality Standards and Product Labeling
The EU has strict requirements for the safety and eco-friendliness of products. For example, clothing must comply with EU directives, and packaging must be labeled in the languages of the selling countries.
To protect products from imitation, it is advisable to register a trademark or unique design. Products must meet CE (Conformité Européenne) and Ecolabel certifications, which confirm their safety and environmental sustainability.
For instance, cosmetics and household chemicals must comply with the REACH regulation, which governs the use of chemicals. Food and beverages fall under the HACCP directives and must undergo strict safety and labeling controls.
Additionally, the EU has a CE marking system that is mandatory for electronics, children’s products, and medical devices. This certification confirms that the products meet European safety standards, enhancing consumer trust and easing entry to marketplaces.
Tax Obligations and VAT
The EU regulates taxation through the OSS (One-Stop Shop) system, which simplifies the VAT payment process. Key points include:
- If B2C sales turnover exceeds €10,000 per year, the company must pay VAT in the countries of sale.
- Registration in the OSS allows submitting reports in one EU country, even when selling in multiple countries.
- The new €10,000 threshold applies across all EU countries, replacing previously existing individual thresholds.
- VAT rates vary by country. Germany — 19%, France — 20%, Poland — 23%, Sweden — 25%.
- Special tax regimes may apply to small businesses, helping reduce tax burden.
Companies operating in the EU need to consider not only VAT but also other tax aspects. For example, in countries like Germany and France, there are additional environmental taxes related to packaging and waste disposal. Non-compliance with these requirements may result in fines or a ban on sales.
It is also important to account for the difference in VAT rates. In the EU, rates range from 17% in Luxembourg to 27% in Hungary. This affects the final product price and business profitability. Companies selling through marketplaces should consider the VAT Marketplace Liability mechanism, which in certain cases makes the platform (such as Amazon or eBay) responsible for collecting and paying VAT, simplifying the work for sellers.
Financial Processes and Payment Solutions
To ensure smooth operation in the EU, companies need to organize convenient financial tools:
- Bank account in the EU — simplifies transactions in euros.
- Account in a payment system (Stripe, PayPal, Wise, Revolut) — for receiving payments on the website.
- Integrated payment solutions — systems that combine checking accounts and acquiring, saving time and money.
- Factoring services — allow receiving payment for goods immediately, without waiting for customer settlements.
In addition to standard bank accounts and payment systems, companies must consider currency risks. Fluctuations in the euro and dollar exchange rates affect the cost of goods and business profitability. To protect profits, it is recommended to use multi-currency accounts and hedge foreign exchange transactions.
Another important factor is cross-border payment taxation. In some EU countries, payment system fees are subject to additional taxes. For example, in France, there is a Digital Services Tax that affects large payment platforms. Choosing the right financial partner reduces costs and speeds up settlements.
Logistics: Warehouse Solutions and Delivery
Effective logistics reduces costs and speeds up order processing. Possible options include:
-
- Own warehouse — suitable for large companies, requires investment in rental space and staff.
Fulfillment centers (Amazon FBA, ShipBob, Zalando Fulfillment Solutions) — outsourcing storage, packaging, and delivery.
3PL providers (third-party logistics) — companies offering comprehensive logistics solutions from storage to delivery.
Local courier services — shorten delivery times within individual EU countries.
When choosing a logistics strategy, it is important to consider delivery speed and storage costs. In the EU, 3PL operators are popular as they handle not only storage but also order fulfillment, returns, and customer service. This reduces the administrative burden on businesses and improves service quality.
It is also worth paying attention to local postal services and courier companies. In Germany, DHL and Hermes work well; in France, La Poste and Chronopost; and in Poland, InPost. Using local carriers helps optimize costs and speed up delivery within the country.
Marketing Channels and Promotion
To succeed in sales within the EU, it is crucial to choose effective marketing channels:
- Marketplaces (Amazon, eBay, Allegro, Etsy) — suitable for mass-market products and handmade goods.
- Contextual advertising (Google Ads, Microsoft Ads) — based on search queries and retargeting.
- Social media (Facebook, Instagram, TikTok, LinkedIn) — enables interaction with the target audience and influencer marketing.
- Email marketing — an effective tool for repeat sales and customer retention.
- SEO optimization — enhances visibility of an online store in search engines.
For successful entry into the EU market, it is important to adapt marketing strategies to the local audience. For example, German users prefer Google and YouTube, while Facebook plays a significant role in France, and Allegro and OLX are widely used in Poland. Content localization, including translations and cultural adjustments, increases customer trust.
Additionally, influencer marketing is key. European bloggers and opinion leaders help build brand recognition and boost conversion rates. Collaborating with local ambassadors is especially effective in the fashion, beauty, and tech niches.
Additional Recommendations for Entering the EU Market
- Content localization — adapting the website, product descriptions, and customer support to the languages and cultures of target countries.
- Legal support — it is essential to consider European data protection laws (GDPR) and return policies.
- Branding and packaging — attractive product design increases the chances of success.
- Competitor research — analyzing popular brands in the niche helps define positioning strategies.
Entering the EU market offers great potential but requires thorough preparation. Success depends on legal expertise, compliance with European standards, thoughtful logistics, and effective marketing. LFT has the expertise in entering the EU market and is ready to assist at every step — from company registration to logistics optimization. LFT specialists will choose the optimal solution based on the nuances of the business and the market.
