Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- Changes for EU Online Sellers
- Changes for Non-EU Online Sellers
- How to Submit OSS Returns
- Conclusion
- Frequently Asked Questions (FAQs)
Introduction
Did you know the average e-commerce business in the EU must keep track of VAT obligations in multiple member states? The complexity of these requirements has often puzzled online sellers. However, the introduction of the One Stop Shop (OSS) regulation in July 2021 aims to simplify VAT reporting across the EU for e-commerce businesses. This comprehensive guide will walk you through the changes brought by OSS, its benefits, registration process, and how it impacts both EU and non-EU sellers.
What is the One Stop Shop (OSS)?
The introduction of the OSS marks a significant evolution in EU VAT compliance. Until July 2021, the Mini One Stop Shop (MOSS) was primarily used for telecommunications, broadcasting, and electronic services (TBE). From July 2021 onwards, the OSS expanded to cover all business-to-consumer (B2C) services across the EU, including distance sales of goods and certain domestic supplies facilitated by electronic interfaces.
Key Benefits of OSS
Implementing the OSS scheme brings several advantages for online sellers:
- Simplified Compliance: Sellers can now consolidate their VAT filings across multiple EU countries into one Member State.
- Reduced Registrations: Sellers storing goods in their home country but selling to other EU countries no longer need to register for VAT in each destination country.
- Streamlined Payments: A single payment per VAT return simplifies the financial reporting process.
However, the initial transition might seem cumbersome as tax authorities and businesses adapt to the new system.
How to Register for OSS
To use OSS, businesses were required to sign up by specific deadlines in 2021. Moving forward, sellers must register by the end of a quarter to use the OSS in the subsequent quarter. Here's a step-by-step guide to registering for OSS:
- Access the BZSt Portal: Visit the Federal Central Tax Office's OSS registration portal.
- Log In: Use existing access data or create a new user account, which may take time.
- Complete the Registration Form: Fill out the necessary details in the "Registration notice for participation in the OSS EU regulation" section.
- Submit and Confirm: Submit the registration form and await a written confirmation from the BZSt.
Businesses can also seek assistance from tax advisors like hellotax, which specialize in e-commerce VAT issues across various EU countries.
Transactions Excluded from OSS
Certain transactions remain outside the OSS regime and require traditional VAT reporting. These include:
- Domestic Sales: These must be reported separately via a standard VAT return in the country of sale.
- Imports and Purchases: Imports from non-EU countries and intra-EU B2B transactions are not covered by OSS.
- Storage in Multiple Countries: EU companies storing goods in various Member States must still register for VAT in each storage country.
Changes for EU Online Sellers
One of the most significant changes introduced by OSS is the abolition of the old distance sales thresholds. Now, a single EU-wide threshold of €10,000 applies. This means:
- Single VAT Registration: Businesses with single-country storage no longer need to register for VAT in each destination country.
- Continued VAT Registration: Companies with multiple storage locations must maintain VAT registrations in those countries.
Impact on EU-Based Companies
To illustrate these changes, consider two scenarios:
Example 1: Alpha Services
Alpha Services, based in Germany, sells to France, Italy, and Spain but only stores goods in Germany. Under OSS, they no longer need VAT registrations in France, Italy, or Spain.
Example 2: Beta Products
Beta Products, also based in Germany, stores goods in France, Italy, and Spain. Therefore, VAT registrations are required in all four countries.
Changes for Non-EU Online Sellers
For non-EU businesses, the OSS brings similar changes to distance sales thresholds. However, nuances still exist:
- Direct Exports: Non-EU companies selling directly to EU consumers will face customs duties and VAT on imports.
- Storage in EU: Goods stored across the EU require VAT registration in each storage country.
Impact on Non-EU Sellers
Here are different scenarios showcasing OSS implications for non-EU sellers:
Example 1: Delta Limited
Delta Limited, a non-EU company, sells via Amazon UK to customers in the EU. Since Amazon serves as the "deemed supplier," VAT interactions occur through Amazon UK.
Example 2: Zeta Limited
A UK-based company, Zeta Limited, stores goods in both the UK and multiple EU countries, necessitating VAT registrations across all these locations.
Deemed Suppliers
A deemed supplier, such as a marketplace platform, plays a crucial role. Non-EU sellers must verify if their platform qualifies as a deemed supplier to streamline VAT obligations.
How to Submit OSS Returns
Despite the OSS launch in July 2021, digital submission of OSS returns remains complex in some countries. In Germany, for instance, sellers must manually declare sales through the "My BOP" portal. Here's a brief guide to manual OSS submission:
- Services vs. Product Sales: Separate chargeable services from product sales.
- Domestic vs. Foreign Sales: Distinguish sales to German customers from those to other EU customers.
- Sort by VAT Rates: Ensure sales are categorized by applicable VAT rates in each EU country.
Enlisting the help of specialized tax advisors like hellotax can simplify this meticulous process.
Conclusion
The One Stop Shop (OSS) regulation signifies a monumental shift in VAT compliance for e-commerce businesses. While the initial setup may be challenging, the long-term benefits include streamlined processes and reduced administrative burdens. Both EU and non-EU sellers must adapt to the new system to maintain compliance and capitalize on the simplifications offered.
Whether you're an established business or a newcomer to the EU market, understanding OSS regulations is vital. Consult tax professionals and leverage automated solutions to ensure seamless integration of OSS into your VAT reporting practices.
Frequently Asked Questions (FAQs)
Do I need more than one registration after OSS?
Yes, you must apply for VAT numbers in your home country or your nominated EU country if you are a non-EU business. Additionally, if you store goods in multiple EU countries, you need VAT registrations there.
Will I need to report all my sales through OSS?
No, only cross-border B2C sales are reported through OSS.
Is OSS a mandatory report?
No, OSS is optional but recommended to minimize administrative costs compared to standard VAT registration in multiple countries.
Can non-EU businesses use OSS reporting?
Yes, non-EU businesses can register for OSS in a chosen EU country, provided they have a standard VAT registration there.
Do I report B2B transactions in OSS?
No, OSS is solely for B2C sales. B2B transactions must be reported via standard methods.
How can I submit the OSS return?
As of Q3 2021, OSS forms must be filled out manually in portals like Germany's "My BOP." Digital submissions are expected to improve in the future.
For more personalized assistance, consult tax advisors such as the team at hellotax, who can guide you through every step of OSS registration and compliance.
