Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- Registration for OSS
- Changes for EU-Based Online Sellers
- Changes for Non-EU Online Sellers
- Filing OSS Reports
- Conclusion
- FAQs
Introduction
Imagine navigating a maze of tax regulations, each turn more confusing than the last. For years, this has been the reality for e-commerce businesses in the European Union grappling with VAT compliance across multiple countries. However, a significant shift occurred in July 2021 with the introduction of the One Stop Shop (OSS). This new regulation marked a turning point, aiming to simplify VAT declarations for businesses by providing a streamlined system for cross-border transactions within the EU.
In this comprehensive guide, we will delve into the intricacies of the OSS, explore its benefits and limitations, and examine its impact on both EU and non-EU sellers. By the end of this post, you’ll have a clear understanding of how OSS can ease VAT compliance for your e-commerce business.
What is the One Stop Shop (OSS)?
Understanding the OSS Framework
The One Stop Shop (OSS) is an extension of the Mini One Stop Shop (MOSS), a scheme initially designed for telecommunications, broadcasting, and electronic services within the EU. From July 1st, 2021, OSS has expanded to include all business-to-consumer (B2C) services and distance sales of goods within the EU, alongside certain domestic supplies facilitated by electronic interfaces. Additionally, the Import One Stop Shop (IOSS) has been introduced for low-value goods imported from outside the EU.
Key Benefits of OSS
The OSS aims to streamline the VAT return process for e-commerce businesses, significantly reducing administrative burdens. Key benefits include:
- Consolidated VAT Returns: Instead of filing multiple VAT returns in different countries, businesses can submit a single quarterly return through the OSS.
- Simplified Compliance: The OSS simplifies the VAT registration process, allowing businesses to register in one member state for all their EU sales.
- Unified Thresholds: With the abolition of individual distance sales thresholds, EU-wide sales under €10,000 can be reported in a single return.
However, in the short term, businesses may face challenges as tax authorities refine the system and companies adapt to new procedures.
Registration for OSS
How to Register
Registering for the OSS requires accessing the Federal Central Tax Office (BZSt) online portal and following several steps:
- Sign-Up Deadlines: Registration must be completed by the end of a quarter to use OSS in the following quarter.
- Portal Access: Utilize existing access data to log into the BZSt portal, or create a new user account if necessary.
- Form Submission: Fill out the “Registration notice for participation in the OSS EU regulation” form and submit it. The BZSt will confirm the registration in writing.
Early registration is advisable to avoid delays and to seek assistance from tax advisors if needed.
What is Not Included in OSS?
The OSS does not cover all transactions. For instance:
- Domestic Sales: Must be reported separately via standard VAT returns.
- Imports and Purchases: Require separate reporting.
- Business-to-Business (B2B) Transactions: Are not included in the OSS.
Changes for EU-Based Online Sellers
Abolition of Distance Sales Thresholds
One of the significant changes is the abolition of old distance sales thresholds. This means companies only need to register for VAT in their home country unless they store goods in multiple EU countries.
Storage-Based VAT Obligations
Businesses storing goods in several EU countries must register for VAT in each country where storage occurs. Domestic sales remain excluded from the OSS and require separate reporting.
Practical Examples
Alpha Services: A German company storing goods solely in Germany can utilize the OSS for its sales to France, Italy, and Spain without needing additional VAT registrations.
Beta Products: This company stores goods in Germany, France, Italy, and Spain, necessitating VAT registrations in all these countries alongside OSS reporting for cross-border sales.
Changes for Non-EU Online Sellers
No Distance Sales Thresholds
Similar to EU sellers, non-EU businesses no longer have individual thresholds for distance sales. They can choose a single EU country for VAT registration, provided they have a standard VAT registration in that country.
Practical Examples
Delta Limited: A non-EU company selling on Amazon UK, with customers in Italy, France, and Spain, needs a VAT number in the UK and leverages Amazon as a deemed supplier.
Gamma Ltd: A UK-based non-EU company storing goods in the UK but shipping to Italy, France, and Spain does not need VAT registrations in those countries provided they use the OSS for cross-border sales.
Deemed Supplier Scenario
To be considered a deemed supplier, a marketplace or similar platform must meet specific conditions, thus simplifying VAT obligations for the seller using that platform.
Filing OSS Reports
Manual Submission
Currently, OSS returns cannot be submitted via digital platforms; they need to be manually filled out on the BZSt portal. This involves sorting sales by country, VAT rates, and service type.
Required Data
While exact data requirements may vary, the forms generally necessitate a breakdown of sales by product type, storage locations, delivery countries, and VAT rates.
Simplifying Pre-Registration
Navigating the complexities of OSS pre-registration can be daunting. Specialized tax advisors, such as hellotax, offer comprehensive services to automate transaction separation, control data quality, and submit OSS notifications, ensuring compliance with VAT obligations.
Conclusion
The One Stop Shop (OSS) represents a significant simplification of VAT compliance for e-commerce businesses operating within the EU. By streamlining VAT returns and reducing administrative burdens, OSS offers a more manageable framework for businesses. While initial challenges are expected as companies adapt to the new system, the long-term benefits of simplified VAT processes are undeniable.
This guide provides a detailed overview of the OSS and its implications for different business scenarios. For personalized assistance in navigating these changes, consider contacting a specialized tax advisor to ensure compliance and optimize your VAT reporting processes.
FAQs
Do I need more than one registration after OSS?
Yes, you need VAT numbers in your home country and any other EU country where you store goods.
Will I need to report all my sales to OSS?
No, only cross-border B2C sales need to be reported through OSS.
Is OSS reporting mandatory?
No, you can choose to continue with standard reporting, although OSS is recommended to minimize administrative costs.
Can non-EU businesses use OSS?
Yes, non-EU businesses can choose an EU country for registration, provided they have a standard VAT registration in that country.
Can I include my expenses/imports in OSS reports?
No, OSS is exclusively for cross-border B2C sales.
