Table of Contents
- Introduction
- The Evolution from MOSS to OSS
- Key Benefits of OSS
- Registration Process for OSS
- What is Excluded from OSS?
- Changes for EU-Based Online Sellers
- Changes for Non-EU Online Sellers
- OSS Filing Process
- Frequently Asked Questions (FAQ)
- Conclusion
Introduction
The introduction of the One Stop Shop (OSS) regulation on July 1st, 2021, marks a significant overhaul in how VAT is managed for online sellers operating within the European Union. Originally, the Mini One Stop Shop (MOSS) allowed service providers to simplify VAT declarations for telecommunications, broadcasting, and electronic services within the EU. With the implementation of OSS, this system now extends to all business-to-consumer (B2C) services and distance sales of goods within the EU. Additionally, the new regulation includes an Import One Stop Shop (IOSS) for low-value goods imported from outside the EU. Let's dive deeper into these changes and what they mean for online sellers.
The Evolution from MOSS to OSS
What Was MOSS?
Until July 2021, the Mini One Stop Shop (MOSS) facilitated VAT reporting for providers of specific digital services within the EU. It allowed these service providers to file a single VAT return in their home country, covering all EU member states. However, the scope of MOSS was limited to certain digital services only.
Transition to OSS
From July 1st, 2021, MOSS transformed into OSS, broadening its reach to include all B2C services and distance sales of goods within the EU. This expansion means that businesses can use OSS to cover VAT for all their sales across EU member states from a single point of registration, simplifying the VAT compliance process significantly.
Key Benefits of OSS
Simplified VAT Returns
One of the most significant benefits of OSS is the simplification of VAT returns. Businesses no longer need to register for VAT in every EU country they sell to. Instead, they can submit a single OSS VAT return in their home country, easing administrative burdens and reducing compliance costs.
Centralized Payment
Under OSS, businesses will only need to make VAT payments to their home country's tax authority, which will then distribute the VAT to the appropriate EU member states. This centralized payment system streamlines the entire process, making it more efficient.
Threshold Removal
The OSS regulation abolishes previous distance sales thresholds individual to each EU member state, replacing them with a universal threshold of €10,000 for the entire EU. This change prevents the complications arising from varying thresholds and makes VAT management more straightforward.
Registration Process for OSS
Initial Registration
To take advantage of OSS, businesses had to register by June 30th, 2021, for it to be effective from July 1st. Subsequent registrations follow similar quarterly deadlines. Registration is accessible via the OSS website of the Federal Central Tax Office (BZSt) or its equivalents in various EU countries.
Required Information
Businesses need to log in to the online portal, submit a registration notice for OSS participation, and await confirmation from the tax authority. It is advisable to consult a tax advisor to navigate the registration process smoothly.
Important Deadlines
Keep in mind that the registration must be completed by the end of a quarter to be eligible for OSS use in the following quarter. Early registration is recommended to avoid any delays.
What is Excluded from OSS?
Domestic Sales
Domestic sales within a single country are not covered by OSS. These transactions must still be reported through the standard VAT return procedures applicable in each country.
Business-to-Business (B2B) Sales
B2B sales are excluded from OSS and require traditional VAT reporting methods. OSS is specifically designed for cross-border B2C transactions.
Imports and Purchases
Imports, purchases, and other similar transactions also fall outside the scope of OSS and require separate reporting.
Changes for EU-Based Online Sellers
For EU-based online sellers, the introduction of OSS eliminates the need for multiple VAT registrations across different member states, provided they do not store goods in those countries. Here are two scenarios to illustrate:
Scenario 1: Single Country Storage
A company storing goods only in its home country and selling to various EU countries can use OSS for VAT reporting without needing additional VAT registrations in other countries. For example, if a German-based online seller only stores products in Germany but sells to consumers in France and Italy, they only need a German VAT registration and OSS reporting.
Scenario 2: Multiple Country Storage
Businesses that store goods in multiple EU countries still need VAT registrations in those countries. OSS simplifies distance sales reporting but does not eliminate the need for local VAT compliance where storage occurs. For instance, if a company stores goods in Germany, France, Spain, and Italy, it will need VAT registrations in all these countries.
Changes for Non-EU Online Sellers
Distance Sales Thresholds
For non-EU sellers, distance sales thresholds no longer apply. Goods shipped from outside the EU are subject to customs duties and import VAT, paid by the end consumer.
Deemed Supplier Concept
When using platforms like Amazon or eBay, these marketplaces may act as 'deemed suppliers,' handling VAT obligations for sales within the EU. Non-EU sellers must assess whether their sales platform qualifies as a deemed supplier to determine their VAT reporting responsibilities.
Example Scenario
Consider Delta Limited, a non-EU company selling on Amazon UK with customers in Italy, France, and Spain. Amazon, acting as a deemed supplier, manages VAT, and Delta Limited only needs VAT registration in the UK for its home sales. Similar concepts apply to other non-EU sellers storing goods within EU countries.
OSS Filing Process
Initial Submission Challenges
During the initial OSS implementation phase, digital uploads for OSS returns were not available, requiring manual submission via the tax authority's portal. Over time, digital submission options are expected to streamline this process.
Required Data
Businesses need to prepare detailed sales data, categorized by service and product type, sales destinations, and applicable VAT rates. This data must be submitted through the tax authority’s specified forms.
Tips for Filing
Organize sales data thoughtfully, separating domestic sales, cross-border sales, and the applicable VAT rates. Ensure sales are sorted by warehouse location and destination country for accurate OSS reporting. Tax advisors specializing in e-commerce can help facilitate this process efficiently.
Frequently Asked Questions (FAQ)
1. Do I need multiple registrations after OSS?
Yes, if you store goods in multiple EU countries, you still need VAT registrations in those countries.
2. Are all sales reported in OSS?
No, only cross-border B2C sales are reported in OSS. Domestic sales and B2B transactions must be reported separately.
3. How do I register for OSS?
Register through your country’s tax authority portal. Consult a tax advisor for assistance if necessary.
4. Is OSS mandatory?
No, but it simplifies VAT reporting and is recommended to minimize administrative costs.
5. Can non-EU businesses use OSS?
Yes, non-EU businesses can register for OSS in any EU country where they have a standard VAT registration.
6. Can expenses and imports be included in OSS reporting?
No, OSS is solely for cross-border B2C sales. Expenses and imports are reported through traditional methods.
7. How do I submit the OSS return?
Initially, OSS returns had to be manually submitted. Future updates may allow digital submissions through tax authority portals.
Conclusion
The One Stop Shop (OSS) regulation represents a significant shift in VAT management for B2C online sales in the EU. While it simplifies cross-border VAT reporting, businesses must still navigate various complexities, especially concerning storage and local VAT obligations. By understanding these changes and leveraging OSS efficiently, online sellers can streamline their VAT processes, reduce administrative burdens, and focus more on growing their businesses.
For accurate and efficient OSS registration and reporting, consulting with tax advisors and leveraging specialized services like those provided by hellotax can be invaluable. Compliance with the new VAT regulations is crucial for smooth operations in the evolving e-commerce landscape.
If you have any questions or need assistance with OSS registration and compliance, don’t hesitate to reach out to our experts for a consultation. Stay updated by subscribing to our newsletter for the latest e-commerce and VAT news.
