Table of Contents
- Introduction
- The One Stop Shop (OSS) Explained
- How to Register for OSS
- Exclusions and Special Cases
- Submitting an OSS Return
- Conclusion
- Frequently Asked Questions (FAQ)
Introduction
Imagine you're running a bustling online store, and suddenly, you're told you no longer need to file separate VAT returns in every EU country you sell to but don't store inventory. It sounds like a dream, right? The EU's One Stop Shop (OSS) regulation, effective from July 2021, aims to simplify VAT processes for eCommerce businesses. This regulatory shift could change the way online sellers handle their VAT obligations significantly.
In this post, we'll dive into what the OSS regulation entails, its benefits, and how it impacts online sellers both within and outside the EU. By the end of this article, you’ll have a solid understanding of the new system and how to navigate it effectively.
The One Stop Shop (OSS) Explained
Background and Significance
Before the One Stop Shop (OSS), online sellers needed to register for VAT in each EU country where they exceeded the distance sales threshold. This cumbersome process not only consumed resources but also posed administrative challenges. Introduced on July 1, 2021, OSS extends the existing Mini One Stop Shop (MOSS) which was limited to telecommunications, broadcasting, and electronic (TBE) services. The aim is to simplify VAT collection across EU member states by allowing businesses to file a single VAT return for all EU sales.
What is OSS?
OSS encompasses not just digital services but all B2C services within the EU and certain domestic goods deliveries facilitated by electronic interfaces. Additionally, a new scheme called the Import One Stop Shop (IOSS) has been introduced for low-value goods imported from outside the EU. Companies can now handle VAT in, essentially, a one-stop manner, significantly reducing administrative pressure.
Key Benefits
The primary advantage of the OSS is its simplicity. Sellers can now:
- Submit just one home VAT return and one OSS VAT return per period.
- Eliminate the need for multiple VAT registrations across different EU countries, provided they don’t store goods outside their home country.
In the long term, this should greatly streamline VAT compliance, though there might be initial complexities during the transition period.
How to Register for OSS
Registration Process
To benefit from OSS, businesses must register on the Federal Central Tax Office (BZSt) online portal. Here’s a step-by-step guide:
- Access the Portal: Log in using a certificate file via “Registration and Login”.
- Forms and Services: Navigate to “Registration notice for participation in the OSS EU regulation”.
- Submission and Confirmation: Enter the required data, submit the form, and await written confirmation from BZSt.
It's crucial to start the registration process early, as creating a user account and managing access can take time. Ensure you adhere to quarterly deadlines for seamless use of OSS starting in the following quarter.
Practical Considerations
Be proactive and consult a tax advisor if you're unsure about any part of the registration. The Hellotax team, for example, offers advisory services and assistance with registration across multiple EU countries, ensuring you meet all OSS compliance requirements.
Exclusions and Special Cases
Transactions Not Covered by OSS
While OSS simplifies many aspects of VAT filing, it doesn't cover:
- Domestic sales: These must still be reported separately via standard VAT returns.
- Imports, purchases, and B2B sales: These also need separate reporting.
Understanding these nuances is crucial as they specify the limits of what OSS can streamline.
Impact on Different Seller Scenarios
Let’s explore six different examples, highlighting how OSS impacts varying business models:
Example 1 – Alpha Services (Single Country Storage)
A German company storing goods only in Germany and selling to other EU countries. Under OSS, Alpha Services needs a VAT number only in Germany and files a single OSS return plus a home VAT return.
Example 2 – Beta Products (Multi-Country Storage)
A company storing goods in Germany, France, Italy, and Spain. Beta Products must maintain VAT registrations in all four countries. Each country’s VAT will be reported separately.
Example 3 – Delta Limited (Non-EU, Using Amazon)
A non-EU seller using Amazon UK to sell to EU countries. Delta Limited needs a UK VAT number while Amazon, as a deemed supplier, will handle VAT for sales to EU customers.
Example 4 – Zeta Limited (Non-EU, Multi-Country Storage)
A UK company storing goods in multiple EU countries and selling in the EU. Zeta Limited needs VAT registrations in all storage countries. Import VAT can be reclaimed in the storage country (France, in this case).
Example 5 – Gamma Ltd (Non-EU, Direct Sales)
A non-EU seller shipping directly from the UK to Italy, France, and Spain without using a deemed supplier. Exported goods will require end consumers to pay customs duties.
Example 6 – Epsilon Ltd (Direct Selling, Multi-Country Storage)
A non-EU seller storing goods in the UK and France and selling through its website. VAT numbers are required for the UK and France only, while OSS aids in exports among member states.
Submitting an OSS Return
Manual Reporting in Transition
In the initial phase (Q3 2021), OSS returns couldn't be filed digitally. Businesses had to fill forms manually on the BZSt web portal. Challenges include:
- Sorting of sales: By product type, delivery countries, customer origin, and VAT rates.
- Detailed separation: Between domestic and foreign sales, by warehouse location, and by applicable VAT rates.
Potential Challenges
Given these hurdles, businesses are advised to leverage specialized tax advisors well-versed in VAT systems like Hellotax. Automation solutions can significantly ease the process by handling complex data sorting and submission requirements.
Conclusion
The One Stop Shop (OSS) regulation represents a significant step toward simplifying VAT payments and reporting across the EU. While the initial transition phase may present challenges, the long-term benefits—reduced administrative overhead, fewer VAT registrations, and streamlined processes—make OSS a valuable resource for online sellers.
Frequently Asked Questions (FAQ)
Do I need more than one registration after OSS? Yes, a VAT number is required in your home country or any EU country where goods are stored.
Will I need to report all my sales to OSS? No, only cross-border B2C sales.
Are there other reports required aside from the OSS return? Yes, domestic sales and stored country sales still need standard VAT returns.
How do I register for OSS? Through the Federal Central Tax Office (BZSt) online portal, with steps detailed above.
Can non-EU businesses use OSS? Yes, but they must choose an EU country for standard VAT registration.
Can I include expenses/imports in OSS reports? No, OSS only covers cross-border B2C sales.
Do I still need to file EC reports & PL SAF-T reports? Yes, B2B cross-border transactions must be reported via the EC list.
By embracing OSS, eCommerce businesses can look forward to a more efficient and less burdensome VAT management process. If any uncertainties arise, consulting with VAT specialists or firms like Hellotax can provide crucial support to ensure compliance and optimal use of the One Stop Shop system.
