Table of Contents
- Introduction
- Understanding the One Stop Shop (OSS)
- How to Register for OSS
- Changes for EU Online Sellers
- Changes for Non-EU Online Sellers
- Process to Submit OSS Returns
- Frequently Asked Questions (FAQs)
- Conclusion
Introduction
The e-commerce landscape within the European Union underwent a significant transformation with the introduction of the One Stop Shop (OSS) regulation. Effective from July 2021, this regulation seeks to simplify and streamline VAT reporting for businesses selling goods and services across multiple EU countries. Prior to this change, businesses faced a complex web of compliance requirements, with each member state maintaining distinct VAT registration and reporting processes. This post delves into the mechanisms of OSS, its benefits, registration processes, and implications for both EU and non-EU online sellers.
Understanding the One Stop Shop (OSS)
The OSS extends the previously limited Mini One Stop Shop (MOSS) which was an electronic system for VAT declaration and payment for Telecommunication, Broadcasting, and Electronic (TBE) services. With OSS, the scope has been broadened to include all business-to-consumer (B2C) services and distance sales of goods within the EU. Additionally, the Import One Stop Shop (IOSS) was introduced for the declaration and payment of VAT on low-value imported goods from outside the EU.
Key Benefits of OSS
Businesses that enroll in OSS can expect several advantages:
- Simplified VAT Reporting: Companies only need to submit one unified VAT return per accounting period for cross-border sales, reducing administrative overhead.
- Single Registration: Registering for OSS in their home country covers all necessary compliance for cross-border transactions within the EU.
- Reduced Compliance Burden: By eliminating the need to register for VAT in each country where goods are sold but not stored, administrative efforts and costs are significantly minimized.
How to Register for OSS
Registering for OSS involves a series of steps through the online portal of respective national tax authorities. This is typically managed at the Federal Central Tax Office (BZSt) for Germany, where businesses can use the existing secure online platform known as the BOP for registration.
Steps for Registration:
- Login Requirement: Access to the BOP requires login credentials, which many sellers already have due to other tax obligations. If not, acquiring these credentials can take time, so early preparation is critical.
- Complete Registration Form: Under the “Forms and Services” section, submit the "Registration notice for participation in the OSS EU regulation". The form must be filled out with precise details to avoid delays or rejections.
- Confirmation: Upon successful submission, the BZSt will confirm the registration in writing. This confirmation includes details on declaration periods and payment deadlines.
Changes for EU Online Sellers
Abolition of Distance Sales Thresholds
Previously, different distance sales thresholds applied to each EU country, compelling sellers to register for VAT once their sales exceeded these thresholds. Under the new regulations:
- A single EU-wide threshold of EUR 10,000 now applies.
- Companies only storing goods in their home country and utilizing OSS won't need multiple VAT registrations in other member states.
Storage Considerations
Despite the simplifications, businesses storing goods in several EU countries still need individual VAT registrations for each country of storage. Domestic sales also remain excluded from OSS and must be reported via the standard VAT return in the respective countries where goods are stored.
Specific Reporting Scenarios:
Example 1: Alpha Services, a German-based company storing exclusively in Germany but selling to other EU countries, needs only its home VAT number and an OSS registration. Example 2: Beta Products, storing goods in multiple EU countries including their home country (Germany), must register for VAT in each of these countries.
Changes for Non-EU Online Sellers
Non-EU sellers face different compliance scenarios depending on their operational model.
Case Scenarios:
Example 1: Delta Limited, utilizing platforms like Amazon UK as their marketplace, requires a UK VAT number for home sales and handles imports and cross-border duties as per the OSS. Example 2: Zeta Limited, a UK company storing goods across several EU countries, must maintain VAT registrations in each of these countries, while managing imports centrally to claim back VAT.
Other Non-EU Sellers: Those selling directly without a deemed supplier must register for VAT in their storage countries and manage customs duties for direct sales to the EU.
Process to Submit OSS Returns
Step-by-Step Submission:
- Service vs. Product Sales: Separate service sales from product sales due to different VAT treatments.
- Foreign vs. Local Sales: Distinguish domestic sales from cross-border sales, ensuring accurate warehouse-specific data.
- Sorting by Country and VAT Rates: Declare and sort all transactions by each EU country’s VAT rates – a crucial step to avoid penalties.
Challenges and Simplifications
Though the digital option for OSS submission was planned, as of 3rd quarter 2021, manual entry through forms is necessary. Sellers should organize their data by type of product/service, sales region, and applicable VAT rates. Consulting a tax advisor like hellotax can vastly simplify this process.
Frequently Asked Questions (FAQs)
Do I need more than one registration after OSS?
Yes, for each country where you store goods, you still need local VAT registrations despite OSS covering cross-border sales.
Are all my sales reported via OSS?
No, OSS covers only cross-border B2C sales. Domestic sales are still reported through standard VAT returns.
How to register for OSS?
Registration is country-specific but generally involves an online submission through national tax portals. Consulting services like hellotax can manage this process in multiple countries.
Is OSS mandatory?
OSS is optional; however, it simplifies compliance and reduces the need for multiple VAT registrations across the EU.
Can non-EU businesses use OSS?
Indeed, non-EU businesses can opt for OSS but must first have a VAT registration in an EU member state of their choosing.
Conclusion
The One Stop Shop (OSS) presents a significant opportunity for e-commerce businesses operating across multiple EU member states, simplifying VAT compliance and reducing bureaucratic overhead. Understanding these changes and effectively implementing OSS can streamline operations and ensure continued compliance.
For businesses unsure of the best approach or facing complexities in the registration process, specialized services like hellotax provide essential support, from registration to compliance.
By leveraging OSS, e-commerce sellers can focus more on business growth and less on navigating the complexities of VAT reporting across the ever-evolving EU market.
Contact Us for Assistance
If you're facing challenges with VAT compliance or need help with OSS registration, our team of experts is ready to assist. Contact us today for a free consultation and simplify your VAT obligations.
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