One Stop Shop – Changes for Online Sellers

Table of Contents

  1. Introduction
  2. What is the One Stop Shop (OSS)?
  3. Registration Process for OSS
  4. Transactions Not Included in OSS
  5. Changes for EU and Non-EU Sellers
  6. OSS Application Challenges
  7. Frequently Asked Questions (One Stop Shop)
  8. Conclusion

Introduction

Are you an online seller navigating the complexities of VAT compliance across multiple EU member states? The new One Stop Shop (OSS) regulation, part of the EU VAT reform launched in July 2021, is here to streamline this process for you. Imagine managing your VAT returns with a single, unified system instead of juggling multiple VAT registrations and returns. Sounds intriguing, doesn't it? In this blog post, we will unravel the intricacies of OSS, explore its benefits and limitations, and guide you through the registration and reporting processes. By the end, you will have a comprehensive understanding of how OSS can simplify your e-commerce VAT challenges.

What is the One Stop Shop (OSS)?

The One Stop Shop (OSS) is an extension of the Mini One Stop Shop (MOSS) system, which was initially designed for electronic service providers. Unlike MOSS, which covered telecommunications, broadcasting, and electronic services, OSS now encompasses all B2C services and distance sales of goods within the EU. The OSS also introduces the Import One Stop Shop (IOSS) for handling low-value goods imported from outside the EU.

Key Benefits of OSS

  1. Simplified VAT Compliance: Instead of registering for VAT in every EU country where you sell goods, you can submit a single VAT return through OSS.
  2. Reduced Administrative Burden: Companies can file one OSS VAT return per period along with their domestic VAT return, minimizing administrative work.
  3. Centralized Payment: Payments for all VAT obligations across EU member states are centralized, reducing transaction and bank fees.

Registration Process for OSS

How to Register

To use OSS, businesses must register through their local tax authority's online portal. For example, in Germany, registration is conducted via the Federal Central Tax Office (BZSt) portal. The process typically involves using an electronic certificate to log in, submitting relevant business information, and waiting for written confirmation.

Timing and Deadlines

  • Initial Registration: Must be completed by the end of a quarter to utilize OSS in the following quarter.
  • Ongoing Registration: Businesses should aim for early registration to avoid delays, especially if setting up a new user account.

Documentation Required

  1. Registration form for OSS participation.
  2. Proof of business establishment and VAT identification.
  3. Any additional information as requested by the tax authority.

Transactions Not Included in OSS

While OSS simplifies VAT reporting, it doesn't cover all types of transactions. Businesses must separately report the following:

  • Domestic Sales: These must still be reported via the standard VAT return in the respective countries.
  • Imports and Purchases: These are reported through the usual VAT return methods.
  • B2B Transactions: To be reported separately, usually via the EC Sales List or equivalent forms.

Changes for EU and Non-EU Sellers

EU-Based Businesses

For EU companies storing goods in multiple countries, while OSS removes the need for multiple VAT registrations for sales, storage in another country still necessitates VAT registration in those countries.

  • Single-Country Storage: Businesses need only register in their home country and submit a single OSS return.
  • Multi-Country Storage: Separate VAT registrations are required for each country where storage occurs.

Non-EU Based Businesses

Similar principles apply to non-EU sellers. Storage within multiple EU countries requires VAT registrations in those countries. OSS can simplify VAT compliance for distance sales, but domestic sales in each storage country must be reported traditionally.

Impact on VAT Reporting

  • Example - EU Seller Alpha Services:

    • Stores goods only in Germany.
    • Uses OSS to report sales to France, Italy, and Spain.
    • No need for VAT registration in these countries.

  • Example - Non-EU Seller Delta Limited:

    • Uses Amazon UK as a deemed supplier.
    • Needs VAT registration in the UK.
    • Uses OSS to manage distance sales to Italy, France, and Spain.

OSS Application Challenges

Manual Submission Process

Despite the digital age, OSS forms currently require manual submission for some countries. This can be cumbersome but ensures thorough checks and balances during the initial implementation phase.

Separate Local Sales from Cross-Border Sales

Sellers must accurately segregate sales to distinguish between domestic and cross-border transactions, necessary for compliance with varying VAT rates across EU member states.

Example Steps

  1. Step-by-Step Sales Sorting: Establish a system for sorting sales based on product type, country of the end customer, and VAT rate.
  2. Data Preparation: Ensure that sales data are readily accessible and properly categorized to facilitate efficient reporting.

Frequently Asked Questions (One Stop Shop)

1. Do I need more than one registration after OSS?

  • Yes, you will need VAT numbers in your home country and any EU countries where you store goods.

2. Is OSS mandatory?

  • No, OSS is optional. You can continue with standard reporting, but this may require VAT registrations in multiple EU states.

3. Can non-EU businesses use OSS?

  • Yes, non-EU businesses can choose a country for OSS registration, provided they have a VAT registration there.

4. Are expenses/imports included in OSS reporting?

  • No, OSS is exclusively for cross-border B2C sales.

5. Who can file my OSS report?

  • Authorized entities, including certain tax advisors or licensed accountants, can file OSS reports on your behalf.

6. How are OSS (One Stop Shop) returns submitted?

  • Currently, OSS returns must be submitted manually in many countries, using forms provided by local tax authorities.

Conclusion

The One Stop Shop (OSS) regulation represents a significant shift towards simplifying VAT compliance for e-commerce businesses in the EU. While the implementation phase may present some challenges, the long-term benefits in terms of reduced administrative burden and streamlined VAT reporting are immense. Whether you are an EU-based seller or a non-EU business, adapting to the OSS system can enhance your operational efficiency and compliance efficacy.

Remember, understanding and leveraging OSS is key to staying competitive in the dynamic landscape of cross-border e-commerce. For personalized assistance and seamless integration into the OSS framework, consider consulting a specialized tax advisor. Stay informed, stay compliant, and harness the potential of the One Stop Shop for your e-commerce success.

Book a free consultation with our VAT experts today and simplify your tax compliance journey!

By following these guidelines, you can master the new VAT landscape under the OSS regulation, making cross-border sales more manageable and less daunting. Happy selling!