SMEs across the European Union are achieving unprecedented success in cross-border trade, but what one MEP calls "a bureaucratic and fragmented market" hits small sellers hardest.
Small and medium-sized enterprises (SMEs) in the EU achieved record sales on Amazon in 2025, surpassing the €40 billion milestone for the first time. Cross-border exports for the 100,000+ EU-based SMEs selling on Amazon reached €17 billion, €2 billion more than the previous year, while intra-EU exports grew to €13.5 billion, up from €12 billion in 2024. These figures demonstrate the strength and professionalisation of Europe's digital entrepreneurs, who are leveraging Amazon to reach customers across borders and build thriving businesses.
The numbers tell a powerful story of entrepreneurial resilience. From a German school supply company that started in 2010 and now exports to countries across Europe, the US and UAE, to a fourth-generation Italian sock manufacturer with 120 years of history selling in 32 countries, these entrepreneurs exemplify what's possible.
"In the last 10 to 15 years, our company has undergone a real transformation,” explains Filippo Ciocca, CEO of Italian sock manufacturer Ciocca. “Amazon has been a disruptive element—it created not just a channel, but a completely new way of working. Ten years ago, our market was extremely limited; almost all of our socks were sold on the Italian B2B market. Today, we are able to reach end-consumers in 32 different countries."
Eduardo López-Villalta, co-founder of Spanish men's grooming brand Feten, has had a similar experience. "In 2023 we launched several products on Amazon in Spain and we started seeing wonderful results,” he says. “In 2024 we decided to launch in France, Italy and Germany. Today, almost 50% of our revenue comes from international markets. Amazon gives us cross-border logistics, consumer trust, and brings us tons of new customers."
"The biggest factor in our growth was that Amazon helped us by handling storage, packing and shipping for our products,” explains Alexander Giersz, co-founder of German school supply company Calcuso. “After one year of selling on Amazon, we started using this service, which meant that our products could be stored in different warehouses across the EU. With just one click, we were able to sell across Europe."
Calcuso’s co-founder compares his experience with the reality small sellers face today: "I opened my e-commerce business 17 years ago and could immediately reach all the EU countries. My wife is trying to open a business now and she has not made a sale in 2–3 months. The reason? The compliance burden. I know competitors who have decided to focus their exports outside the EU for this reason.”
Small businesses pay the highest price for complex regulations
Compliance costs hit small sellers hardest. Newcomers and smaller sellers, like Gierz’s wife, are the ones most impacted by complex compliance requirements and regulatory environments.
Amazon’s Chief Global Affairs and Legal Officer, David Zapolsky, outlines that "it's been a struggle for SMEs the entire time. Things like VAT, recycling schemes that vary from European country to country. The European Commission agreed to try to streamline VAT regimes, but it's happening too slowly, and we're hearing from small and medium-sized enterprises that it needs to happen faster."
Filippo Ciocca quantifies the burden: “In order to be compliant with regulations, small and medium European companies have to bear a cost that foreign competitors do not have to deal with, and that could be up to 25 or 30% of our cost of operations. One of the most important topics that policymakers at European level have to address is the issue of VAT in the different states and regions. When I sell in 32 countries, I have to deal with all this administration, and it is not easy for a small producer to account correctly for the different VAT regimes. I have to have consultants who enable me to file VAT returns that are precise and detailed, and this certainly has a cost. Today foreign competitors do not have to deal with this issue.”
Member of the European Parliament Pablo Arias Echeverria warns: "We have been discussing how Europe can be at the forefront of retail innovation since 2009, but nothing has changed. We have a bureaucratic and fragmented market with at least 27 different rules. I think the Commission is ready, I think the Parliament is ready, but we also need consensus among all Member States. If we want to be competitive, we need to simplify and harmonise."
"When selling in the European Union, SMEs face several difficulties—different regulations in each country, EPR (Extended Producer Responsibility) requirements, taxes, labelling differences—and this makes the process widely more complicated when expanding through different countries,” explains López-Villalta.
Simplifying tax rules to give European small businesses a fair chance
Today’s tax rules force European small businesses to navigate 27 different VAT systems, while some bad actors exploit loopholes by falsely registering companies in Europe to avoid stricter oversight.
MEP Arias Echeverria emphasises the unfair competition: "We have the highest level of protection for consumers, but if there are companies that do not comply, it doesn't matter how high the level is. We hear from companies like Calcuso or Ciocca—they comply with the regulation and are doing great. But retailers from third countries that we cannot be sure are complying with our rules are competing in unfair circumstances with local European companies. This does incredible damage to European SMEs, to consumers and to the credibility of European institutions. If we want to have the highest level of consumer protection and the best quality products in the world, we need to take this into account."
Amazon’s Chief Global Affairs and Legal Officer, David Zapolsky, goes onto say that "this strange disparity between the way reseller rules affect non-EU sellers versus EU sellers means there is a fraud vector. Certain sellers can set up pretend domiciles in the EU to avoid this payment obligation, and in doing so, they never pay VAT at all. Extending deemed supplier would close off this fraud vector and enable the European Union to collect significantly more revenue."
"If I had to send a message to EU policymakers it would be this: harmonise, harmonise, harmonise; simplify, simplify, simplify," emphasises Alexander Giersz.
Since 2021, online retailers—including Amazon—have been required to collect VAT on behalf of overseas sellers trading on European stores, while EU-based sellers are responsible for paying VAT directly to different national authorities. This "Deemed Supplier" rule creates an uneven playing field where EU sellers navigate 27 regulatory regimes while sellers from outside the EU benefit from simplified compliance.
Amazon continues investing in seller success through new AI-powered tools to simplify operations and help sellers navigate regulatory complexities. But private sector innovation alone cannot address structural regulatory barriers. Ensuring European SMEs can compete globally requires investment by online retailers as well as policy action.
What European policymakers can do to help small businesses thrive
Amazon calls on European policymakers to take concrete steps to level the playing field and reduce administrative burdens. Our proposal: Extend deemed supplier legislation to require online retailers to collect VAT on all sales, regardless of where sellers are based, ending the structural disadvantage European SMEs currently face.
With this change, online marketplaces would be responsible for calculating, collecting and remitting VAT for European sellers, not just those based outside Europe who currently benefit from a simplified approach. This will reduce the need for domestic SMEs to manage complex, multi-jurisdictional VAT reporting for every sale, allowing them to avoid excessive paperwork and freeing up time to focus on core business operations.
Simplification and removal of cross-border barriers would boost European SMEs’ capacity to offer their products across borders, strengthening the European Single Market. It would also eliminate unfair competition from non-compliant sellers who currently evade VAT payments, allowing compliant SMEs to compete on fair terms.
The €40 billion in sales achieved by EU SMEs selling on Amazon in 2025 demonstrates what's possible when digital commerce and the Single Market work together. With the right regulatory framework—one that protects consumers while enabling legitimate businesses to thrive—European entrepreneurs can continue to scale, compete globally and drive economic growth across the continent.
The European Commission's “One Europe, One Market” Single Market Roadmap, expected to be endorsed by member states at the European Council on April 23–24, commits to eliminating the most harmful Single Market barriers to trade by March 2027, with a specific focus on helping SMEs scale up—a welcome signal that should now be matched with swift delivery.
As the European Commission's Competitiveness Compass recognises, removing cross-border barriers is essential to boosting the EU's competitiveness and resilience. Taking decisive action now will ensure that Europe's digital entrepreneurs can continue writing success stories for years to come.
