Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- Key Benefits of OSS
- Registration Process for OSS
- Transactions Not Included in OSS
- Changes for EU-based Online Sellers
- Changes for Non-EU Online Sellers
- How to Submit OSS Applications
- Conclusion
- Frequently Asked Questions (FAQs)
Introduction
Have you ever felt overwhelmed navigating the complex waters of VAT regulations when selling goods across EU borders? You're not alone. The arrival of the One Stop Shop (OSS) regulation aims to simplify these intricate processes, bringing standardized VAT returns across the EU for online sellers. This post delves deep into the OSS changes, from registration to the key benefits and how these modifications will impact both EU and non-EU-based online sellers.
In this comprehensive guide, you will learn about the essential aspects of OSS, including registration procedures, exclusions, and practical examples to help you navigate the new VAT landscape. By the end, you'll have a clearer understanding of how OSS can streamline your VAT compliance and what you need to do to adapt to these changes smoothly.
What is the One Stop Shop (OSS)?
The One Stop Shop (OSS) is an extension of the previously existing Mini One Stop Shop (MOSS), tailored to encompass a broader range of business-to-consumer (B2C) services. Starting from July 2021, the OSS scheme includes all distance sales of goods within the EU and specific domestic supplies of goods facilitated by electronic interfaces.
The Extension from MOSS to OSS
Originally, MOSS was designed exclusively for telecommunications, broadcasting, and electronic (TBE) services. Effective from July 1, 2021, the new OSS scheme extends these coverage areas to all B2C services and distance sales within the EU. This also includes the Import One Stop Shop (IOSS) for low-value goods imported from non-EU countries.
Key Benefits of OSS
The primary incentive behind the OSS is its potential to significantly simplify VAT compliance for businesses. Although the initial setup might seem a bit cumbersome, the long-term benefits are irrefutable.
Simplified VAT Returns
Under OSS, businesses can consolidate their VAT obligations through a single quarterly return per EU country. This means that companies storing goods in their home country and selling to multiple EU countries without additional storage only need to file one home VAT return and one OSS VAT return per period.
Reduced Administrative Burden
The introduction of OSS eliminates the need for multiple VAT registrations in various EU countries, provided there is no storage of goods outside the home country. This consolidation reduces bureaucratic hurdles and administrative expenses, allowing businesses to focus more on growth and less on compliance.
Registration Process for OSS
To use the OSS scheme, businesses must register via the Federal Central Tax Office (BZSt) in Germany, or the corresponding tax authority in their respective countries. Here is a step-by-step guide to registering for OSS:
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Set Up an Account:
- Log in to the respective tax authority’s online portal using a certificate file. If you don't have an access account, create one in advance to avoid registration delays.
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Submit Registration Form:
- Navigate to the “Forms and Services” section, find the “Registration notice for participation in the OSS EU regulation,” fill out the required fields, and submit the form.
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Confirmation:
- Upon approval, you will receive a written confirmation along with details on declaration periods and payment deadlines.
Important Deadlines
Ensure registration is completed by the end of a quarter to start using OSS in the following quarter. For example, if you aim to use OSS from Q4 (October 1), you must register by the end of September.
Transactions Not Included in OSS
While OSS is comprehensive, it does not cover every transaction type. Here are some exclusions:
- Domestic sales within the same EU country
- Imports and purchases
- Business-to-business (B2B) sales
These transactions must be reported via standard VAT returns specific to each country where the transactions occur.
Changes for EU-based Online Sellers
One of the most significant shifts with OSS is the abolition of old distance sales thresholds. Previously, different countries had varying thresholds, but now an EU-wide 10,000 euro threshold applies, simplifying compliance but necessitating awareness of new registration requirements.
Impact on Different Business Setups
Example 1: Alpha Services – Single Country Storage
Alpha Services, a Germany-based company, sells online to France, Italy, and Spain but only stores goods in Germany. This setup requires only a home VAT number in Germany and no additional VAT registrations in the other countries.
Example 2: Beta Products – Multiple Country Storage
Beta Products not only stores goods in Germany but also in France, Italy, and Spain. This scenario necessitates VAT registration in each country where goods are stored.
OSS Reporting for EU Sellers
EU companies need to prepare sales data meticulously, separating domestic sales from cross-border sales and further classifying them by VAT rates. This can be challenging, especially if using fulfillment services like Amazon FBA, which might involve multiple storage locations.
Changes for Non-EU Online Sellers
For non-EU online sellers, the abolition of distance sales thresholds also requires strategic adjustments. Non-EU businesses either sell directly or through deemed suppliers, affecting how VAT compliance is managed.
Selling through Deemed Suppliers
A deemed supplier, such as Amazon or eBay, will handle VAT for goods shipped to EU consumers, relieving non-EU sellers of some compliance burdens but still requiring VAT numbers in the supplier's home country.
Example: Delta Limited
Delta Limited, a non-EU company, sells via Amazon UK and to various EU countries. Amazon, as the deemed supplier, manages the VAT obligations, while Delta Limited needs VAT registration only in the UK.
Direct Selling without Deemed Suppliers
Non-EU companies selling directly need to manage their VAT obligations carefully. They must register for VAT in each country where goods are stored and handle cross-border B2C sales via standard VAT returns.
Example: Gamma Ltd
Gamma Ltd, a UK-based company, sells directly to consumers in Italy, France, and Spain from the UK without storing goods in these countries. As a result, Gamma Ltd manages VAT through standard returns for domestic sales and exports.
How to Submit OSS Applications
In its initial phase, the OSS quarter returns (Q3 2021) need to be submitted manually due to local operational challenges. E-commerce sellers must fill out the OSS forms via the BZSt portal, detailing sales and profits based on the product type, storage, delivery countries, and VAT rates.
Detailed Submission Instructions
- Service vs. Product Sales: Separate service revenue from product sales in OSS returns.
- Domestic vs. Foreign Sales: Differentiate between sales to German and non-German EU customers, sorted by warehouse locations.
- EU Countries and VAT Rates: Sort transactions by VAT rates applicable to each EU country.
Conclusion
The OSS regulation marks a pivotal shift in European VAT compliance, promising streamlined operations for online sellers. Although this transition may seem daunting at first, particularly with manual submissions in the early stages, the long-term benefits are substantial. Whether an EU or non-EU seller, understanding and adapting to OSS will minimize administrative burdens and foster more efficient cross-border trade.
Frequently Asked Questions (FAQs)
Do I need more than one registration after OSS? Yes, you will need VAT numbers in your home EU country and all other EU countries where goods are stored.
Will I need to report all my sales in the OSS report? No, only cross-border B2C sales need to be reported. Domestic sales must be reported via standard VAT returns.
Is OSS mandatory? No, you can choose to continue with regular reporting, but OSS simplifies cross-border compliance substantially.
Can non-EU businesses use OSS reporting? Yes, non-EU businesses can register for OSS in a chosen EU country where they have a standard VAT registration.
What transactions are excluded from OSS? Imports, purchases, business-to-business sales, and domestic sales are excluded and must be reported via the standard VAT return method.
How can I submit the OSS return? As of Q3 2021, OSS returns must be submitted manually via the respective tax authority's online portal.
For any uncertainties or assistance with OSS registration, consider consulting a tax advisor who specializes in e-commerce and VAT compliance to ensure a smooth transition.
