Mastering VAT compliance with PwC’s Nicole Stumm
Expanding across Europe is the most direct route to sustainable growth, but moving from a home-market setup to a truly localised presence requires more than just a new logistics plan. It requires a clear-eyed approach to the regulatory shifts that follow your inventory.
When you store goods closer to your customers, you unlock immediate wins: delivery times drop, checkout completion rates climb, and returns are processed faster. However, these operational perks come with specific tax obligations. To unpack how brands can navigate indirect tax while scaling, we sat down with Nicole Stumm, Partner for Indirect Tax at PwC Germany, for an episode of Business Casual.
The strategic upside of localised warehousing
Success in European e-commerce often hinges on meeting the customers where they are–often with the expectation that their orders should arrive tomorrow, not next week.
Shipping from a single central hub, like Germany, to customers in Italy or France makes next-day delivery nearly impossible. Speed of delivery is the second most important consideration for a great delivery experience, and localising your stock allows you to meet this demand head-on (Zalando Insights 2024).
On average, localised fulfilment results in 31% faster customer deliveries. This speed is critical for conversion; 2-3 days is currently considered a reasonable delivery time in most markets, but there is a steep drop-off after this point. In nearly all European markets, a 6-day wait is considered too long. (Zalando Insights 2024). By localising, brands don’t just improve service; they can achieve a GMV boost of 3-6% simply by improving lead times (Zalando Insights 2024).
However, as Nicole explains, the tax footprint follows the physical goods: “If you have a localised setup and have the goods stored in a localised warehouse,, you do need a VAT registration in every single EU member state where you have a warehouse and where you ship from.”
If you utilise fulfilment services across multiple EU member states to stay competitive, you will need corresponding VAT registrations for each. Each one brings its own set of compliance requirements:
Local VAT returns: You must declare VAT locally in each country where goods are stored and shipped.
EC Sales Listings (ESL): This is required to report intra-EU supplies of goods.
Intrastat reporting: Necessary for tracking the physical movement of goods between EU member states.
Local knowledge: Often, brands need someone who understands the specific VAT rules of each member state to ensure accurate reporting.
Rapid resale: Reducing “Time to Online”
Localised warehousing doesn’t just get products to customers faster; it gets returned products back into your sellable stock much quicker. By using local return centres, brands can save 5 to 10 days in transit on customer returns (Zalando Insights 2024). This efficiency allows you to unlock up to 29% of non-offerable stock, meaning your capital isn’t tied up in transit but is back on the “digital shelf” ready for the next buyer (Zalando Insights 2024). Plus, orders fulfilled from local warehouses often see up to 11% lower return rates, as faster delivery often correlates with higher customer satisfaction and lower “buyer’s remorse” (Zalando Insights 2024).
Simplifying cross-border trading with OSS
While the administrative side of expansion can seem daunting, there are existing frameworks designed to help. Currently, brands can use the One Stop Shop (OSS) scheme to report “distance sales” (goods sent from one EU member state to a private customer in another) through a single report for the entire EU.
The current limitation is that OSS does not yet cover “local supplies” –for example, shipping from a Polish warehouse to a Polish customer. But the regulatory environment is evolving. Nicole highlights the upcoming VAT in the Digital Age (ViDA) reforms, expected from 2028, which will allow suppliers to report these local supplies under OSS.
Most importantly, ViDA will address the administrative burden of holding stock itself. From 2028, brands will be able to report the movement of goods between warehouses through the OSS. This means you will no longer require a local VAT registration simply because you hold stock in a local warehouse or stock location.
Kicking in 2028, it will be possible for suppliers to [...] report the deemed supply from one warehouse to the other warehouse under an OSS scheme. So this will help them to simplify the reporting obligations they have.
This represents a massive simplification for any business looking to utilise local warehousing structures without the overhead of multiple local registrations.
Data as your foundation
Whether you manage VAT via an internal team or a tax partner, compliance is only as good as your data. Nicole emphasises that brands must ensure their data structure is clean and “upfront” to avoid friction during audits.
To maintain a smooth operation, you need to centralise:
Transaction flows: Precise mapping of where goods start and end.
Legal contracting parties: Clear visibility on everyone involved in the chain.
VAT rates: Applying the specific rates required by the destination country.
Integrating these data points into a single ERP system via automated interfaces reduces risk and allows the compliance process to run in the background while the business focuses on scaling.
There is a large variety of different tax compliance tools and services that can help brands fulfil their European VAT requirements.
Growth without the guesswork
The benefits of a localised warehouse setup, including increased checkout rates and deeper customer loyalty, far outweigh the administrative effort. The secret to a successful rollout is preparation. By mapping out your tax registrations and aligning your data systems before the first parcel leaves the local hub, you turn compliance from a hurdle into a foundation for European scale.
