How Europe is killing makers and micro-entrepreneurs

Thanks to tomis who posted the EU FAQ on the topic below: https://op.europa.eu/en/publication-detail/-/publication/ad1...

None of this applies to companies that are micro-enterprises or use generic rather than branded packaging. There's a helpful diagram on page 13. The author of this article seems to have imagined a worst-case scenario based on either a misunderstanding or misrepresentation of the EU rules; the discussion here seems to have a lot of people who are in a big rush to demonize their perceived political opponents on ideological grounds.

I don't know if this EU regulation will work or not (most likely not), but I can share how it is done in China (where package volume is orders of magnitude higher).

China identifies "choke points" most packages pass: large platforms and logistics companies. Yes, Chinese e-commerce is more centralized on Alibaba/JD/PDD etc, but there are actually much more logistics companies in China than in EU.

They also do not introduce these regulations "from tomorrow" (well, sometimes they do, but it's a different topic). E.g. the non-degradable plastic regulation was issued in 2020 to come in effect in 2025. This gives time to prepare and implement (unlike EU border controls mess...)

So now if something is shipped in non-degradable plastic, the logistics company is fined along with the sender. This is much more scalable and easy to implement. Logistics companies might rise their prices a bit in light of expanded work scope, but it would be peanuts compared to every individual seller.

Could EU just ask DHL/Hermes/whatever to charge an additional €1 "for recycling"? Yes, but...

But of course EU is fundamentally different in a way that the politicians need to please the electorate, so nothing is really planned ahead.

One of the biggest problems that I have in the EU is that it's almost federated. EU will pass laws, countries will adopt those laws, but you end up with 20-24 different versions of those laws. With some countries being strict or lenient about the law that everyone agreed to. And a lot it is written from the perspective that large corporations are the only ones who do business throughout the EU. It's completely missed that small entrepreneurs may also want to take part. Modern technology makes it feasible, but old ideas just drags it down.

[delayed]

A couple of things to note:

1. The EU commission wanted a single central registry

2. It was the member states, via the Council of Ministers, that torpedoed this.

3. The EU now advises its member states to not implement/enforce this

4. Until the correction, which is on its way, can be fully enacted.

So the same old same old: member states do shitty stuff and blame the EU.

I think in the future we should think less about fine-based regulation, and more about easy access to education, and assistance in compliance. It's much better for the environment (and the economy) that someone doesn't pollute, for example, than that someone pollutes than pays (a potentially large) fine.

So if you want to make a product, there should be readily available, easy to read and follow, guides to make your product compliant. For products with large sales volumes or higher risk, the procedures of course should be more thorough, allowing some more complexity. I think even free consults offered by governments could be a great idea, much better to have consultants before violating a law, than waste money with a lot of inspectors. Also stimulating people to solve problems (many times using technology) is another benefit.

My first decision when building my company was to leave Spain.

They smash you very quickly. They do not care if they ruin you via prosecurion or you have to shut down. The tax agency is extremely agressive. The laws favor the agents to extents that are illegal and weven criminal (check the bonus of inspectors).

Check Robert Amsterdam work on this, something we all spanish know for a long time.

PPWR is an EU catastrophe.

Firstly for the reasons outlined in the article: it essentially makes being a micro/small business in the EU impossible, if your market is other EU countries.

Secondly because it validates insidious populist views that the EU institution is useless and incompetent at a fundamental level.

The legislation is so ABSURDIST that the EU have actually asked companies to ignore the law that they just implemented. I can assure you it is difficult to ignore a law that comes with a €200000 fine for non-compliance.

PPWR is not the only one. Don't forget WEEE and the battery regulation. Only for VAT we have a single entrypoint, for all other regulations, businesses have to submit for each country. Its simply impossible.

On the other hand I estimate that between 50% and 200% of the taxes collected like this are wasted and not applied to their ultimate goals. The average collected amount per submission is so small that you cannot pay the bureaucrats managing the complex submissions from these sums.

An entrepreneur told me that they were being audited regarding the battery regulation. Two consultants came over from EY and audited all submissions in depth. They found out that the business overpaid by €10. The entrepreneur of course didn't mind and told them to keep the €10. The EY consultants told the entrepreneur to resubmit, otherwise the business would be fined. I think the government spent more on that audit by EY than the business will ever bring in on fees.

On top of this we have the regulations like Intrastat and in the future near-real-time submission of digital invoices to our tax authorities.

This echos the FCC rules in the US, which I believe are gotten around by not complying.

Even if you are not making an intentional radiator, and/or are using datasheet-specified layouts or modules, you still must comply, which makes these businesses non-viable if complying.

I believe Adafruit gets around certifying every device by declaring themselves a cellphone company and being on good terms with regulators. This isn't viable for the sort of businesses and people described by this article.

I'm not sure about the Ali/Amazon products. I'm assuming they just are not complying.

This is actively preventing me from sending packages to other countries as a maker. No matter how small the risk is, I don't want to risk a 5000 euro fine for sending a small amount of packages to other EU countries.

This is a great read and I can extend this argument really to any small business. Tax filing, VAT, bookkeeping, privacy, consumer, workplace and sectoral requirements frequently impose a disproportionately large cost on microbusinesses. EU is more and more split along the enterprise and VC backed line, and everyone in between has disproportionate costs. My barber in Stockholm often complains about this - the amount of money they would need to earn to overcome all these costs is staggering. So they often do lots of gigs on the side.

UK has similar rules but, as with pretty much all other similar regulations, there are de minimis carve-outs:

≤ £1m turnover: no packaging EPR obligation, regardless of packaging volume.

£1m turnover + >25 tonnes of packaging: small producer obligations.

£2m turnover + >50 tonnes: large producer obligations.

The EU has been removing de minimis thresholds because 'China' can easily 'exploit' them. They're kind of right, but it's obviously an insanely stupid situation when someone selling something as a hobby, or just starting up on their own gets dragged into this.

As someone living in the tiny country of Estonia with just about 1.2 million residents, this worries me. No one but the biggest online shops in the EU will bother with the paperwork for such a small market. I'm expecting my import options to drop sharply in the coming years because of this.

I initially learned about this from a luthier and plectrum designer, Hufschmidt Guitars, a one man shop in Switzerland. Some quotes from the update he sent to his customers:

""" For a one-person workshop, the result has been pretty brutal.

[...]

The numbers simply do not work for a micro-business like mine. Even in France and Germany, I send only around 1 to 2 kg of cardboard per year. In some other EU countries, I may send less than 100 g in an entire year. Paying annual compliance costs for one or two parcels makes no economic sense.

[...]

I have therefore decided to maintain EU shipping only to: FRANCE GERMANY """

This is not new though. "We do not sell to EU end users."

https://pcengines.ch/recycle.htm

"... there are separate registration and recycling schemes for each of the 28+ EU member jurisdictions (and even a few of their provinces). What part of COMMON MARKET was so hard to understand for EU lawmakers ?

Since there is no single registration available, and separate registration would involve mindboggling complexity, bureaucracy and costs, we do not sell to EU end users until the EU gets their act together. Please order from EU based distributors, or as a business customer.

Business customers are expected to meet their obligations by registering in the EU countries they sell in. "

That was already ages ago when I did some sofware for them. 2007 ish if I'm to trust my Linkedin.

>The main idea of EPR is sensible: businesses that place packaging on the market should help finance its collection and recycling.

it is not sensible at all because businesses and individuals who dispose of that packaging already pay for the privilege.

I ran an online shop from Switzerland. Some years ago packages suddenly returned with the info I need to register with a packaging something company now. I had no idea what's going on, I didn't understand the concept and what they wanted. Apparently there were several companies I could register at pay a fee and it somehow became legal again, none of them looked real it looked like a lot of weird broken fake websites.

Germany was just a small market for us so we stopped shipping there.

I assume it's better and more clear these days and this probably makes it kinda easier in the long run. However it's a perfect example on how such things don't work if not done properly.

Newly established laws are always like a pendulum.

It swings to one side, overreaching and overcomplicating things, and then back to the other side where restrictions are loosened or removed.

Anybody remembers the EU platform for dispute resolution? It's gone after 10 years because nobody used it.

PPWR in 10 years will probably be something like: Sign up for a recycling system in your country and pay for the packaging you've brought into the market. Also have icons on the packaging so people know how to recycle them. (Except in France, they'll surely require some crazy stuff as always.)

The complaint is totally understandable, BUT the examples do not make sense. Arduino did not start as some dude selling less than 10 boards a year, but as an educational tool, which THEN ramped up to 100s of boards produced every day.

If your perspective is "I may sell 10 boards this year, maybe", your target is some local/national maker-faire, not a EU marketplace.

I think makers with such limited productions will just fly under the radar (if you sell so little, it's likely you probably won't need to incorporate or declare taxes in a lot of EU countries). If they sell 100s of products across EU, they probably have at least one over-worked accountant taking care of existing compliance stuff.

EU states do an excellent job at tolerating each other, with the odd hiccup. They are also gerontocracies fronted by middle aged leaders focused on pleasing older wealthy people, who last cared about entrepreneurship in the 70s. When you combine it with extremely low birth rates, you get a rotting economy.

It appears there is space for "packaging and distribution in EU as a service" business model.

Creators, producers and manufacturers in many fields do not distribute or sell directly to consumers (musicians can't directly upload to Spotify and Apple Music; film producers don't upload to Netflix, writers don't print their books).

A small-time maker may pay a fee to the established distributor of the physical products, who takes care of compliance, and uses their packaging and distribution channels.

as the whole world crushes small entities one has to wonder whether the EU would be the saviour or not. Apparently not. With its rules, they merely help crush small business as per usual.

I heard in the 50s an american could just startup a business installing septic tanks. But now the same person would need a myriad of regulations to be met, heavy equipment use mandated, all of which raise overhead to a level where its impossible to get off the ground.

I always felt the EU were the "good guys", IE not allowing corps to steam roll everyone, what with their rules fining poor behvaiour such as privacy violations, chargers being non standard etc.

However the same problem exists in weird ways you wouldnt even imagine.

For example if someone walks into a small "mom and pops" coffee shop and accuse the owner of "ejecting them due to harrasment reasons", that results in a court case, which can bankrupt the whole margin thin enterprise.

You might say, wait how on earth would a random troublemaker get funding to take a cafe to court, and for what benefit? For one its easier for a settlement to be reached regardless of fault that benefits the claimant than a long court process.

Now how could claimants have the resources? Unbelievably it turns out there are free national non profit corporations that will take any claim for free to court for situation mentioned above.

So what happens in the end? The small coffee shops cant survive but the larger corps who can afford the random payouts are fine, the competition seems to go away on its own and the claimants are happy with what amounts to random payouts for little work.

Please look it up it, and correct me if im wrong, I only know this from some little research into the forays of why small coffee shops find it hard to survive in western landscapes and risks, as I wanted to open my own coffee shop!

In summary, as always the road to ruin is paved with good intentions. So the EU trying to help a little guy in a specific context, ends up creating a situation that makes all small coffee shops non profitable.

I have no solutions.

History will see last years as EU that turned Europe

-suicidal for own energy industry and economy via green deal without real impact for the world (see EU vs World/ China CO2 emisions chart)

-demographically/socially suicidal via open borders and stupidly generous social benefits for immigrants instead of supporting own families

-going back in time via overregulation of every aspect of our lives

-becoming police state/s via overcontrol

-hypocritical via outsourcing industries and making carbon footprint in other parts of the world

-internally weak via not protecting european values over immigrants "rights" and terror mongering (p.e. Xmas markets canceled on many places)

-supresing democracy via online censorship (DSA)

-juicing own people via over-taxation (exit taxes and unrealized gains taxes)

-being stowaway in terms of own external security (majority of states didn't fulfill NATO requirements in terms of GDP's percentage spent on military...well this actually is one thing that improves over the years, but Europe needed a kick from east and west to becoming adult here after years of underspending)

All in all, EU controlling Europe is committing civilizational suicide, living off past merits which results/capacity are running low while morally lecturing the rest. At the same time also destroying the very foundations that made Europe prosperous. History will likely look back at us as we/Europe voluntarily chose decline.

ps. the fact that I had to check if any claim made is not illegal, shows how far with censorship we already are. Freedom of speech cant be regulated without being lost.

And then there is Temu (as a platform). They've done all the necessary EPR/PPWR agreements with various European countries/vendors. It handles all the fees and reporting for Chinese sellers.

The problem here is that government regulations don't work. Only punishment works and punishment should be based on number of infringements.

So if some poorly discarded packaging is found in a forest by a government official, they can document it. At the end of the year, the companies involved in the making of the improperly discarded products would be fined some amount proportional to the number of recorded infringements and magnitude of infringements (e.g. total weight) to cover clean up costs pertaining to that particular source of waste.

A simpler solution (which the author doesn't seem to consider) is just putting hte cost on the packaging vendors, who will of course pass it on to their customers. So the price of a padded bag or whatever will rise perhaps 20 cents, but the person mailing goods from their micro-storefront doesn't have to worry about that.

I imagine what will happen in practice is that the makers will simply ignore the law and hope not to get prosecuted or audited?

This is really sad to read :(

So many entrepreneurs (who can because software businesses) are leaving EU

I've seen some conflicting claims on this law and to me it sounded like it affects mostly producers of packaging, but everyone else seems to be complaining about it too. Did everyone actually read the law or is this a game of telephone?

No idea if this applies to the whole of the EU, but the government designated critters responsible for this in the Netherlands mention that business that ship less than 50 tons of packaging material, and don't use single-use plastics are exempt.

https://www.verpact.nl/nl/nieuw-bij-verpakkings-epr-zo-regel...

These blog posts often allude that the EU regulatory bodies are just slightly incompetent or short-sighted and these fragmented national models happen by accident. But unfortunately that's not the case: The EU pretends to be a single-market and almost mantra-like the EU officials keep repeating it. But the fact of the matter is that there is neither a single market nor is the European public ready for one. If there was a true single market (like the US has one) - then this would very quickly lead to massive changes in the labour market. Imagine all the Romanian construction companies suddenly building office buildings in Madrid. Or countless Polish architects suddenly undercutting the much more expensive architects in Milano. Whether they know it or not, Europeans would like to have all the benefits of a single market (mostly more competitive pricing) without any of the downsides (massive labour shifts) - but that option doesn't exist. So what they do is harmonize regulation for a few big corporations, while all the smaller companies (and their employees) still get to keep their national moats.

While the regulation is really stupid and could be done much better with either a one stop shop or with simply taxing/complying in the country of origin instead of destination.

It opens a very clear market opportunity for LECTRONZ themselves. Stop bitching and start doing the shipping and selling, you probably have the volume all the micro entrepreneurs will ship to you, comply with a single jurisdiction and you take on the task of complying with all the other ones.

The EU just printed you a licence to be a middleman, the words you are looking for are thank you.

It is possible to ignore laws if it's too much bother to comply with them... it's hard to imagine the authorities will come after someone for mailing out 10 anti-static bags.

It's typical eco-suicide: give eurocrats more power and fake work to do, pretend most recycling regulations aren't scams, and practically destroy trade between countries in the union because you need one representative in every single country you want to sell anything in. As if adding a 5 (soon to become 7€) fee (plus tax) for every line of item (not package) outside the union wasn't enough. It is also quite obvious both must've been heavily lobbied by major retail groups through EuroCommerce.

Feedback for this utterly deranged regulation can be seen below, over 5k entries by many businesses in EU:

https://ec.europa.eu/info/law/better-regulation/have-your-sa...

I can attest to this. People say the Netherlands is among the best countries to be an entrepreneur. The visa policies for starting a business are good. But man, the whole tax system, shares, and holding management—belasting breathing up your neck—is horrible when I am trying to do firefighting. You never know when you might get hit by a tax bill. The tax system is built towards benefitting large organizations, and they can afford expensive tax consultants who can help them dodge it. The VC ecosystem is limited and not risk averse.

Having operated in multiple geographies, US is really business friendly.

These conversations about EU regulations, bureaucracy or general slowness and carefulness contrasted to American ease of doing business and raising capital always make me think "but... look at the state of America! Is it really something to emulate?"

Laws like this really need to only be enforced for companies of certain sizes.

Odd that there not already is a minimum threshold in place.

This would even apply when selling a few electronic knik knaks on ebay?

The workaround here tends to be simple: Don't sell stuff as a incorporated business. Only do that once you cross a certain level of revenue.

But as with anything here in Europe, check your laws.

I understand the package complains, and I understand how it undermines the maker scenario. I think smartly using the scale of things might be helpful, but they are targeting Qualcomm and not Arduino users.

Unfortunately, because all of us have postponed thinking about solving the problem, now we have a problem and braking is safer than not breaking at all.

In my country we do have advanced collecting systems but it all falls apart when different materials can be prioritised. There were an interesting proposal of having the companies to buy back the recyclable rubbish but that was scraped.

I was up to this. Because they would need to emit in the docs the amount of money the package cost and how much they would pay back, it was possible to track the sources from a fiscal eyes.

I think it was scraped because people already thought on ways of breaking it, instead of giving better alternatives.

not all regulation is bad regulation. micro packaging is waste, and waste is an issue in europe. the problem stem when you get conglomerate unfairly competing from deregulated countries, applying maximum legal optimization to skirt regulations that smaller player cannot evade. THAT is the problem to fix.

These sorts of regulations are killing not just companies in Europe but across most of the world.

Unless you are a medium to large-sized company, it is very difficult to remain fully compliant with the regulations in most nations now - across fields, from packaging, to agriculture, to food, aviation..

isn't that what cyberpunk is in terms of a political something (as opposed to just an aesthetic)? f EU and its bureaucrats, f the corps and its shills ... about time we're going rogue now .. HACK THE PLANET!

EU regulation is basically broken beyond repair. And I used to be the biggest proponent of it. When everyone was being angry that they are taking away light bulbs this was a kick starter for LED lighting and I guess Signify (formerly Philips lighting) and Osram wouldn’t exist today if they hadn’t been forced to invest into that field of technology.

Unfortunately the EU does not at all understand how the internet works, maybe even how the global economy works today. Their goals are very reasonable and I fully support them, but the legislation around it (DMA, AI Act, GDPR, this new packaging stuff, don’t get me started with whatever everyone calls the cookie law) is just out of touch with how the modern world works. Again, I don’t think this is out of bad intention (not even to give an advantage to EU companies, but that is up to discussion) but mostly just out of a complete lack of understanding of what would really benefit the common EU citizen. The just seem to listen to activist groups and lobbyists aiming for regulatory capture and when trying to find a compromise in between they chose the worst of both worlds.

You really have to wonder what Xi Jinpeng thinks of all this.

The extent to which China can appear to do nothing while the west kills itself is just unbelievable. How could you possibly respect people that can't get out of their own way so repeatedly?

Anti-EU regulation sentiment really seems to have an uptick in line with widespread availability of LLMs.

The EU isn't perfect, but the catastrophising I read feels mostly like astro-turfing attempts at destabilisation.

It's probably more easily noticed from inside the EU.

I would think that someone could make a business that sells "standard" packaging that's registered throughout the EU, and that a small business could use that packaging instead?

Perhaps I'm misunderstanding something?

it seems weird to me, because normally legislation of this sort has a minimum amount of revenue required, or company size requirements, but not this one? I mean reading the article it seems not, but if it was just some guy telling me this on the street I would naturally expect they were misinformed and there was a requirement for the law to apply that they had missed in their review of the matter.

All regulations end up being scheme’s to protect incumbents. Especially when the incumbent is ostensibly, and loudly against the regulation.