The high rate of product returns is one of the major issues for e-commerce stores globally.

In Europe, all countries require merchants to grant a minimum 14-day cooling off period to consumers, when the latter can return products bought online without stating any reason. The underline rationale is that consumers do not see or try the products before placing an order: so, they shall be allowed to change their mind. Save some exceptions (for instance, custom-made products and groceries), most goods purchased online at any EU online store can be returned by the buyer without giving any explanation to the seller within the statutory framework.

Unavoidably, under such legal framework, merchants need to address high return-rates and undergo significant financial, logistical and inventory management issues.

For merchants engaging in cross-border sales to consumers outside the EU, there are also significant tax hurdles involved.

In many cases, unless a small consignment exemption applies, the goods returned have already been subject to customs duties/VAT in the country of destination (where the non-EU consumer resides). Most countries make difficult, if not impossible, applying for a refund of such import duties, especially for single parcels shipped via a courier service (China, Japan, etc.).

Furthermore, returned products are potentially subject to inbound customs/VAT in Europe at re-importation, unless the merchant is capable of setting up a logistical flow that enables him to enjoy the exemption provided for by Regulation EU nr. 952/2013. It appears that many EU merchants re-import returned products via preferred channels in the UK: but what after Brexit?

The same problem is experienced by U.S. merchants shipping to Europe or to other Continents.

Unsurprisingly, a growing share of sellers prefers not to receive cross-border returns from other countries and finds alternative solutions, such as allowing the customer to retain the product or asking buyers to send the product to a local non-EU facility (for inspection, resale or even destruction).

In a period of proposed VAT reforms for e-commerce, it is definitely time for the EU Commission to address the tax problems linked to cross-border e-commerce returns.