Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- What Transactions are Excluded from OSS?
- How OSS Applications are Submitted
- FAQs about OSS (One Stop Shop)
- Conclusion
- FAQ Section
Introduction
Have you ever wondered how online sellers across the European Union (EU) handle complex Value-Added Tax (VAT) obligations? As of July 2021, the One Stop Shop (OSS) regulation aims to simplify VAT reporting for e-commerce businesses. In this article, we will explore the nuances of OSS, how it impacts online sellers within and outside the EU, the registration process, exclusions, key benefits, and challenges. By the end of this post, you'll gain a comprehensive understanding of the OSS regulation and how to navigate it effectively for your e-commerce business.
What is the One Stop Shop (OSS)?
The OSS is an extension of the Mini One Stop Shop (MOSS) scheme, which previously allowed service providers offering telecommunications, broadcasting, and electronic (TBE) services to declare and pay VAT in one Member State. Effective from 1st July 2021, OSS extends this functionality to all distance sales of goods within the EU, covering certain domestic supplies facilitated by electronic interfaces and introducing the Import One Stop Shop (IOSS) for low-value goods imported from outside the EU.
Key Benefits of OSS
Understanding the key benefits of OSS can help businesses comprehend its long-term advantages, though the initial phase might seem daunting:
- Simplified VAT Returns: Companies can file a single VAT return, consolidating multiple state filings into one.
- Reduced Administrative Burden: Businesses no longer need separate VAT registrations in each EU country where they hold stock.
- Centralized Payments: Payments are centralized through a single home VAT return and an OSS VAT return per period.
How to Register for OSS
Registration for OSS is a straightforward process but requires careful navigation of specific steps:
- Timely Registration: To use OSS from a new quarter, businesses must register by the end of the preceding quarter.
- Federal Central Tax Office (BZSt) Portal: Registration is conducted via the BZSt online portal, involving a certificate file for login, form submission, and confirmation.
- Contact a Tax Advisor: Seek assistance from tax professionals to ensure accurate data entry and compliance with deadlines.
What Transactions are Excluded from OSS?
While OSS simplifies VAT compliance, some transactions remain outside its scope and require separate reporting:
- Domestic Sales: These must still be reported via standard VAT returns in the country where the transaction occurs.
- Imports, Purchases, and B2B Sales: OSS is exclusive to B2C cross-border sales, and such transactions require standard VAT returns.
Changes for EU-Based Online Sellers
From July 2021, significant changes have impacted EU online sellers:
- Abolishment of Distance Sales Thresholds: The old distance sales thresholds are now obsolete, except for a single country storage scenario with a 10,000 euro EU-wide threshold.
- VAT Registration for Storage: Companies storing goods in multiple EU countries need VAT registration for each country of storage.
Example: Alpha Services
Alpha Services, a German-based company storing goods only in Germany and selling to France, Italy, and Spain, needs no additional VAT registrations in these countries thanks to OSS.
Changes for Non-EU Online Sellers
Non-EU online sellers also need to adapt to OSS regulations:
- Export Classification: Goods directly sold to EU end-customers without a European business base are classified as exports, and buyers are charged customs duties.
- VAT Registration for Storage: Similar to EU sellers, non-EU businesses must register for VAT in each EU country where they store goods.
Example: Delta Limited
A non-EU company selling on Amazon UK to customers in the EU must have a UK VAT number. With OSS, they do not need VAT registrations in countries such as Italy, France, or Spain for shipments through Amazon.
How OSS Applications are Submitted
Despite the OSS being introduced in July 2021, some administrative hurdles remain, and manual form submissions are currently required. The process involves:
- Portal Submission: Use the BZSt "My BOP" portal for submitting OSS forms.
- Data Preparation: Transactions should be sorted by product type, storage/ delivery countries, and end-customer locations.
- Separate Listings: Sales and products/services must be listed separately for accurate reporting.
Data Required for Submission
While specific OSS forms for Germany were not available at the time of introduction, similar forms from other countries provide insight into the data required:
- Sales Classification: Separate classifications for services and products, foreign and domestic sales.
- Detailed Sorting: Breakdown of sales per EU country, sorted by VAT rates and product type.
FAQs about OSS (One Stop Shop)
Here are some common questions and answers concerning OSS for online sellers:
Do I Need More Than One Registration after OSS?
Yes, VAT numbers are needed for the home country and any EU countries where goods are stored.
Will I Need to Report All My Sales to OSS?
No, only cross-border B2C sales are reported through OSS.
How to Register for OSS?
Registration is possible via the BZSt portal. Follow the outlined steps and consider professional assistance for accuracy.
Can Non-EU Businesses Use OSS Reporting?
Yes, non-EU companies must choose an EU country for their OSS registration.
Can I Include My Expenses/Imports in OSS Reporting?
No, OSS reporting is solely for cross-border B2C sales.
Conclusion
The OSS regulation marks a significant change in the e-commerce VAT landscape, aiming to simplify and centralize VAT reporting for online sellers within and outside the EU. Despite the initial complexity, the OSS system provides long-term benefits by reducing administrative burdens and streamlining VAT returns. By understanding the OSS framework, timely registration, and potential exclusions, businesses can effectively navigate VAT obligations and focus on growth in the European market.
FAQ Section
How to register to OSS?
To register for OSS, use the Federal Central Tax Office (BZSt) portal, ensuring you meet the quarterly deadlines. Seek assistance if necessary to avoid delays and errors.
Do I need a special report for OSS?
Yes, the OSS report must cover all B2C cross-border sales, matching the OSS structure requirements.
Who can file my OSS report?
The OSS report can be filed by any authorized individual or a tax advisor. Consider utilizing specialized services like hellotax for streamlined compliance.
Is OSS a mandatory report?
No, businesses can choose to continue with standard VAT reporting, though OSS is recommended to minimize administrative costs.
Can non-EU businesses use OSS reporting as well?
Yes, non-EU companies can use OSS by registering in an EU country and maintaining VAT registration in that country.
Embarking on the OSS journey can initially be challenging, but with careful planning and professional guidance, businesses can benefit from simplified VAT processes and focus on scaling their e-commerce operations across the EU.
