Table of Contents
- Introduction
- What is OSS (One Stop Shop)?
- How to Register for OSS
- Who Should Register for OSS?
- Exclusions from OSS
- OSS Reporting: Practical Aspects
- Examples of VAT Allocation under OSS
- Conclusion
- Frequently Asked Questions (FAQ)
Introduction
Imagine a bustling e-commerce business owner juggling multiple VAT registrations across various EU countries. Now, picture a single streamlined solution that simplifies this complex process. If this piqued your interest, you’re not alone. The new “One Stop Shop” (OSS) regulation introduced by the EU from 1st July 2021 is designed exactly for this purpose – to simplify VAT reporting for online sellers. This blog post will provide a comprehensive guide on what OSS entails, how it benefits online sellers, and the practical steps for implementation.
In this article, you will learn about the OSS system's framework, changes for EU and non-EU sellers, registration processes, and the exclusions to be mindful of. By the end, you’ll have a clear understanding of how OSS could potentially simplify your VAT obligations and streamline your e-commerce operations.
What is OSS (One Stop Shop)?
Origin and Evolution
Before diving into OSS, it's crucial to understand its predecessor, the Mini One Stop Shop (MOSS). MOSS was an electronic system allowing service providers of telecommunications, broadcasting, and electronic (TBE) services to register for VAT in one EU Member State but operate across the entire EU. However, OSS extends this convenience beyond just TBE services to include all business-to-consumer (B2C) transactions for goods and certain domestic supplies.
Starting from 1st July 2021, any business, regardless of where it is established, can use the OSS to report and remit VAT for all EU cross-border B2C sales. This significant expansion of scope means more businesses can benefit from this simplified VAT reporting mechanism.
Key Benefits of OSS
- Simplified VAT Reporting: Registering in one EU Member State, businesses can manage and declare VAT for all EU sales via a single VAT return.
- Uniform VAT Threshold: Abolishment of individual distance sales thresholds in favor of a unified €10,000 threshold for the entire EU.
- Reduced Admin Burden: Businesses no longer need to register for VAT in multiple EU countries.
- Efficient Cash Flow Management: Businesses make one VAT payment per reporting period, vastly improving financial management.
How to Register for OSS
Step-by-Step Registration Process
To harness the benefits of OSS, online sellers must register through the online portal of their local tax office. Here’s a step-by-step process to guide you:
- Sign-Up Timing: Register by the end of a quarter to start using OSS from the following quarter.
- Online Portal Access: Access your local tax authority’s portal (e.g., Germany's BZSt) and follow the “Registration and Login” procedure.
- Certificate File: Use a certificate file to log in. Create a user account if necessary.
- Submit Registration: Use the “Forms and Services” section to find the OSS registration form.
- Verification: Submit and await written confirmation from your tax authority.
Who Should Register for OSS?
EU-Based Online Sellers
- Single Country Storage: Companies like Alpha Services, which store goods in only one EU country but sell across several others, need only a home VAT number and OSS registration.
- Multiple Country Storage: Companies like Beta Products, which store goods in multiple EU countries, still need VAT registrations in each storage country but can streamline sales reporting via OSS.
Non-EU Online Sellers
- Distance Sales without EU Presence: Non-EU sellers without a physical presence in the EU still export goods, charging customs duties and taxes to EU end consumers.
- Storage in Multiple EU Countries: Non-EU companies storing goods within the EU must register for VAT in each country where storage occurs.
Deemed Supplier Scenario
A marketplace like Amazon may qualify as a deemed supplier, taking on VAT obligations itself, simplifying VAT reporting for sellers using these platforms.
Exclusions from OSS
Not all transactions fall under the OSS framework:
- Domestic B2C Sales: Must still be reported via standard VAT returns.
- B2B Transactions: These are outside the scope of OSS and require standard VAT reporting.
- Imports and Purchases: Transactions involving these are excluded from OSS.
- Services vs. Product Sales: For sellers offering both, these must be reported separately due to differing VAT treatments.
OSS Reporting: Practical Aspects
Data Submission Requirements
Even though OSS aims to simplify VAT reporting, the initial setup and understanding can be complex. Here's what you need to know:
- Product vs. Service Sales: Separate reporting required within the OSS return.
- Country-Specific Data: Transactions must be sorted by EU country and VAT rate.
- Manual Submission: Initially, businesses must manually enter OSS returns via local tax portals due to implementation challenges.
Transition Hurdles
As with any new system, the transition may have its hurdles. Authorities are still optimizing digital submission options, and initial OSS returns might need meticulous manual preparation. Engaging a specialized tax advisor, like hellotax, can smoothen this process considerably.
Examples of VAT Allocation under OSS
EU-Based Seller Examples
- Alpha Services: Stores in Germany, sells in France, Italy, and Spain. Needs only German VAT number and OSS registration.
- Beta Products: Stores in Germany, France, Italy, and Spain. Requires VAT registrations in all four countries but uses OSS for cross-border sales.
Non-EU Seller Examples
- Delta Limited: Non-EU company using Amazon UK, shipping to Italy, France, and Spain. VAT registered in the UK, using Amazon's deemed supplier model.
- Gamma Ltd: Non-EU seller storing goods in the UK and selling directly to EU without a deemed supplier. VAT obligations in the UK, duties paid by EU end consumers.
Conclusion
The OSS system revolutionizes how online sellers handle VAT across the EU, providing a unified, simplified framework that significantly reduces administrative overhead. Whether you're an EU-based or non-EU seller, embracing OSS could streamline your VAT reporting and compliance. As with any regulatory change, a clear understanding and timely action are crucial to leveraging its full benefits.
Frequently Asked Questions (FAQ)
Do I need more than one registration after OSS?
Yes, you still need VAT numbers in each country where you store goods.
Will I need to report all my sales to OSS?
No, only cross-border B2C sales are reported via OSS.
How to register for OSS?
Registration is straightforward via your local tax office’s online portal. Deadlines apply, so early action is advised.
Is OSS mandatory?
No, but it simplifies VAT obligations and can reduce administrative costs.
Can non-EU businesses use OSS?
Yes, by choosing an EU country for OSS registration, provided they have standard VAT registration there.
Can I include expenses/imports in OSS?
No, OSS is only for B2C cross-border sales.
Do I still need to file EC reports?
Yes, for B2B transactions.
By now, you should have a comprehensive understanding of the OSS system and how to navigate its complexities. For personalized advice and assistance, consider consulting a tax advisor specializing in OSS and VAT compliance.
