07 May 2015

Digital Single Market Strategy – what’s in it for Startups?

Digital Single Market Strategy – what will it bring for Startups?

Yesterday Commissioners Andrus Ansip and Günther Oettinger presented the Digital Single Market Strategy. Digital Single Market is one of Juncker Commission’s priorities and foresees making EU’s single market fit for the digital age – tearing down regulatory walls and moving from 28 national markets to a single one.

But what exactly does it mean for startups? What are key points of this strategy and when will we be able to see its first results?

The Strategy in 3 pillars

The Digital Single Market strategy is composed of 16 key actions under 3 pillars. All of them will be adopted by the Commission by the end of 2016 but some, especially those interesting for startups are expected already in 2015. But it’s only the beginning of the process. The European Parliament and national governments need to adopt the proposals. And it takes in average more than a year.

The 1st pillar focuses on better access for consumers and businesses to digital goods and services across Europe. This pillar is the most important for innovative and creative business. It includes cross-border e-commerce, parcel delivery, geo-blocking, copyright and VAT regimes.

The 2nd pillar is going to create the right conditions and a level playing field for digital networks and innovative services to flourish. It is about telecoms rules, audiovisual media framework, e-Privacy Directive and cybersecurity.

The 3rd pillar is tailored to maximise the growth potential of digital economy. It includes an initiative free flow of data, European Cloud, e-skills and e-government.

New horizon for cross-border e-commerce

The Digital Single Market Strategy is a great sign for SMEs and startups, but what exactly does it mean?

First change, which is going to make life of many of digital entrepreneurs simpler, is easier cross-border e-commerce. Commission plans to harmonise EU rules on contracts and consumer protection when you buy online. As a result, it will be easier to offer your products in other member states. It opens possibility to scale-up your business in a market of more than 500 million consumers.

Commission is going further and plans to make parcel delivery more efficient and affordable. It will reduce shipping and lower transaction costs. This is likely to broaden consumers’ choice and increase the likelihood of them buying across the frontiers.

Better access to digital content

Commissioner Ansip said today that there are two kinds of unjustified geo-blocking to tackle: one coming from bad practices in e-commerce and second caused by different copyright regulations. Digital Single Market Strategy is about to put an end to that. Addressing geo-blocking will give consumers more choice for products and services and enable digital startups from different Member States to compete on Digital Single Market. This is likely to be done by changing e-commerce framework by the first half of 2016.

Copyright modernisation, one of the actions under 1st pillar, aims to facilitate the licensing of rights for online distribution of audiovisual content. Being able to legally access content online cross-border will also help deal with geo-blocking concerns. The Strategy is promising a modern, more European copyright law. The goal is to reduce differences in national copyright regime, which would allow users who buy music or films at home to enjoy this content while traveling across Europe. It will also open more possibilities for creators and content industry. These promises should be followed through with legislative proposals before the end of 2015.

Better tax regulation for Startups

The Commission wants to reduce VAT related burden and obstacles when selling across borders. Legislative proposals are expected to be ready in 2016 and they will include single electronic registration and payment mechanism to cross-border sales of physical goods, a common EU-wide VAT threshold to help start up e-commerce businesses. As a result entrepreneurs will only have to deal with one tax administration which in itself saves a lot of time and significantly lowers compliance costs. There will be no difference in VAT rates between goods ordered from abroad or domestically.

EYIF keeps an eye on policy for Startups and Young Innovators

EYIF president Kumardev Chatterjee stresses that startups and Digital Single Market are the highest priority at the moment. “Today’s innovators will build tomorrow’s champions”, he underlined yesterday at the European Business Summit where he delivered a seminar on EU Funding for Startups and SMEs as an invited expert, and where Vice-President Ansip stressed the importance of Europe supporting startups and entrepreneurs in the Digital Single Market strategy. EYIF will support these efforts and will reach out to its community all across Europe to make the Digital Single Market a success.‎

We are actively participating in shaping the policy discussion on the Digital Single Market and we will be suggesting initiatives to support startups in Europe and help them compete in the global digital market. We are currently preparing a package of proposals that will take a form of a Startup Act with proposals targeted to improve the startup ecosystem in the EU offering entrepreneurs more opportunities to scale-up, access the best talent and compete globally.