Table of Contents
- Introduction
- Understanding the One Stop Shop (OSS)
- Registration Process for OSS
- Impact on EU-Based Online Sellers
- Impact on Non-EU Online Sellers
- Reporting and Submission
- Conclusion
- Frequently Asked Questions (FAQs)
Introduction
Imagine you’re an online seller, expanding your reach across Europe. The potential for growth is vast, yet the complexity of Value Added Tax (VAT) regulations can be daunting. As of July 2021, a significant change has emerged in the form of the EU’s One Stop Shop (OSS) regulation, aimed at simplifying the VAT filing process for e-commerce. In this blog post, we will explore how the OSS system reshapes VAT obligations, its benefits, registration process, and specific scenarios for both EU and non-EU sellers.
Understanding the One Stop Shop (OSS)
What is the OSS?
The One Stop Shop (OSS) is an extension of the previously limited Mini One Stop Shop (MOSS), an electronic system that allowed service providers dealing with telecommunications, broadcasting, and electronic services to declare and pay VAT in a single EU Member State. As of July 2021, this has expanded to encompass all business-to-consumer (B2C) services and distance sales of goods within the EU, including certain domestic supplies facilitated by electronic interfaces.
Key Benefits of OSS
The primary goal of OSS is to simplify the VAT return process. Here are some of the key benefits:
- Unified VAT Returns: Instead of navigating multiple VAT registrations for each EU country where sales occur, businesses can now submit one unified VAT return through OSS.
- Reduced Administrative Burden: This simplification allows businesses to manage their VAT obligations more efficiently, reducing administrative costs and complexities.
- Broad Coverage: The OSS also includes distance sales of low-value goods imported from outside the EU.
Limitations of OSS
Despite the many advantages, certain transactions are excluded and require separate reporting. These include:
- Domestic Sales: Sales within the seller's own country must be reported via the standard VAT return method.
- Business to Business (B2B) Sales: B2B transactions remain outside the OSS framework and must be reported through traditional VAT returns.
- Imports and Purchases: These also require standard VAT reporting outside the OSS system.
Registration Process for OSS
How to Register
To begin using the OSS, businesses must complete their registration by specific deadlines depending on the quarter they wish to start. Registration occurs through local tax authorities, such as Germany’s Federal Central Tax Office (BZSt) portal. The process involves:
- Login and Account Setup: Accessing the BZSt online portal and setting up a user account if not already existing.
- Form Submission: Completing the 'Registration notice for participation in the OSS EU regulation' form and submitting it online.
- Confirmation and Guidance: Receiving written confirmation and further instructions from the tax office on declaration periods and payment deadlines.
Consulting a tax advisor is highly recommended to navigate any uncertainties during this process.
Impact on EU-Based Online Sellers
With the abolition of national distance sales thresholds, a single EU-wide threshold of 10,000 euros now applies. Let’s look at specific scenarios:
Example 1: Single Country Storage
Alpha Services, a Germany-based company, sells to consumers in France, Italy, and Spain but only stores goods in Germany. OSS registration means:
- All sales within the EU are reported through a single OSS VAT return, eliminating the need for local VAT registrations in France, Italy, and Spain.
- Domestic sales in Germany are still reported through the standard German VAT return.
Example 2: Multiple Country Storage
Beta Products, another German-based company, stores goods in Germany, France, Italy, and Spain. Here:
- VAT registration is required in all four countries where storage occurs.
- OSS simplifies reporting of cross-border sales, but domestic sales in each country still require separate local VAT returns.
Impact on Non-EU Online Sellers
Key Considerations
- Distance Sales Thresholds: The same EU-wide threshold applies, and goods delivered to the EU will incur customs duties and taxes for the end customers.
- Storage Locations: VAT registration is necessary for every EU country where goods are stored.
- Deemed Supplier: If using marketplaces like Amazon or eBay, these platforms might act as “deemed suppliers,” handling VAT obligations.
Example 1: Deemed Supplier
Delta Limited, a non-EU company, sells on Amazon UK and to consumers in several EU countries. With Amazon as a deemed supplier:
- Delta Limited only needs a VAT number in the UK.
- Amazon manages VAT on cross-border sales to other EU countries.
Example 2: Direct Selling, No Deemed Supplier
Gamma Ltd, another non-EU company, sells directly through their website and stores goods only in the UK. For cross-border sales:
- VAT registration covers UK sales.
- End consumers in the EU pay customs duties on deliveries.
For complex scenarios involving multiple storage locations and cross-border sales, consulting a tax advisor can streamline compliance with OSS requirements.
Reporting and Submission
Manual Form Submission
Despite the intention for a streamlined digital upload process, initial OSS returns must be filed manually through portals like Germany’s BZSt. This involves:
- Separating Sales Types: Distinguishing between chargeable services and product sales.
- Sorting by Destination: Categorizing sales by the end customer's country, ensuring correct VAT rates apply.
Data Preparation
To ease this process:
- Organize Data: Prepare data to clearly reflect warehouse locations and sales breakdowns.
- Utilize Expert Help: Consider using specialized tax advisors such as hellotax for automated transaction separation and filing.
Conclusion
The OSS regulation heralds a new era of streamlined VAT compliance for e-commerce businesses within the EU. While the transition involves an initial adjustment period, the long-term benefits of reduced administrative burdens and unified reporting are substantial. Both EU and non-EU sellers stand to gain from leveraging the OSS, provided they understand its scope, registration processes, and limitations.
Frequently Asked Questions (FAQs)
Do I need more than one registration after OSS?
Yes, you'll need VAT numbers in your home country and in all EU countries where you store goods.
Will I need to report all my sales to the OSS report?
No, only cross-border B2C sales need to be reported in the OSS.
Is OSS a mandatory report?
No, but it simplifies the process. Standard reporting requires VAT registration in every EU country where you sell.
Can non-EU businesses use OSS?
Yes, they can choose an EU country for OSS registration but must have a standard VAT registration in that country.
Can I include expenses/imports in the OSS report?
No, the OSS is only for cross-border B2C sales.
Who can file my OSS report?
Anyone with registered authorization can file, but in some countries, you may be limited to licensed accountants or tax advisors. Services like hellotax can assist with this.
In summary, the OSS is a critical development for simplifying VAT compliance in the increasingly interconnected world of e-commerce. Understanding and utilizing this system effectively can significantly enhance operational efficiency and market reach.
