One Stop Shop: Changes for Online Sellers

Table of Contents

1. Introduction
2. What is the One Stop Shop (OSS)?
3. Key Benefits of OSS
4. Registering for OSS
5. OSS Exclusions
6. Changes for EU-Based Online Sellers
7. Changes for Non-EU Online Sellers
8. Submission of OSS Applications
9. Conclusion
10. FAQs

Introduction

Navigating the tax implications of e-commerce can be daunting, particularly for businesses operating across multiple countries. With the EU's revamped VAT regulations, the One Stop Shop (OSS) represents a significant shift in how online sellers manage their tax responsibilities. This new system aims to simplify and streamline the VAT process, though not without some initial complexities and adjustments. In this post, we’ll delve into the intricacies of the OSS, its benefits, registration process, and how it impacts both EU and non-EU sellers.

What is the One Stop Shop (OSS)?

The OSS, an extension of the earlier Mini One Stop Shop (MOSS), came into effect on July 1, 2021. Initially, MOSS was designed for electronic services, like telecommunications and broadcasting. Recognizing the need for a broader application, the OSS now encompasses all business-to-consumer (B2C) services and distance sales of goods within the EU, along with some domestic transactions mediated through electronic interfaces.

Moreover, the OSS is complemented by a new Import One Stop Shop (IOSS) for the declaration and payment of VAT on the sale of low-value goods imported from outside the EU. This development helps streamline VAT reporting, reducing the need for multiple registrations.

Key Benefits of OSS

While initially more complex as both businesses and tax authorities adjust, the OSS is designed to simplify VAT returns significantly. Here’s how:

• Unified Reporting: Businesses storing goods in their home country while selling to different EU nations only need to submit a home VAT return and one OSS VAT return per period.
• Reduced Administrative Burden: By consolidating VAT reporting into a single system, businesses no longer need separate VAT registrations in each country of sale, provided they meet the criteria.

Registering for OSS

To start using the OSS, businesses must register through the OSS website of the respective tax authority. Here’s a step-by-step guide to the registration process in Germany:

1. Access BZSt Portal: Log in via the Federal Central Tax Office’s online portal (BOP), which requires a certificate file for verification. If you don't have an account, create one promptly to avoid delays.
2. Submit Registration Form: Complete the “Registration notice for participation in the OSS EU regulation” under the “Forms and Services” section.
3. Confirmation: After submitting your registration, the BZSt will confirm in writing, followed by further information concerning declaration periods and payment deadlines.

Consult your tax advisor if you encounter any uncertainties during this process to ensure compliance.

OSS Exclusions

Not all transactions fall under the OSS umbrella. Exclusions include:

• Business to Business (B2B) Transactions: These remain outside OSS and require standard VAT reporting.
• Imports, Purchases, and Domestic Sales: Similarly, these transactions need separate declaration processes via the traditional VAT return methods.

Changes for EU-Based Online Sellers

For EU-based businesses, the implementation of OSS abolishes the old distance sales thresholds, replacing them with a new EU-wide €10,000 threshold. Here’s what has changed:

• Single EU-Wide Threshold: EU companies no longer need VAT registrations in countries they ship to but do not store in.
• Storage Necessitates Registration: Businesses with storage in multiple EU countries still need separate VAT registrations for each country.
• Domestic Sales: These transactions are not included in OSS and continue to require standard VAT returns in respective EU countries.

Example Scenarios for EU Businesses

1. Alpha Services (Stores Only in Germany):

   • Sell to consumers across France, Italy, and Spain.
   • Only a German VAT number is required as all goods are stored in Germany.
   • OSS simplifies VAT reporting for Alpha Services.

2. Beta Products (Stores in Several EU Countries):

   • Still needs individual VAT registrations in each country of storage.
   • OSS simplifies cross-border sales but does not eliminate the necessity of local VAT numbers where goods are stored.

Changes for Non-EU Online Sellers

Non-EU sellers also experience changes similar to their EU counterparts. The main points include:

• Distance Sales Threshold Removal: Eliminating the need for individual thresholds simplifies the process.
• Export and Storage Rules: Goods stored in the EU still require VAT registrations in respective countries. Direct exports to EU customers involve standard VAT and potential customs duties for the customer.

Common Situations for Non-EU Sellers

1. Selling through Deemed Suppliers (e.g., Amazon UK):

   • Amazon, as a deemed supplier, takes on VAT reporting for certain transactions.
   • VAT numbers are required for countries where goods are stored.

2. Selling Directly without Deemed Suppliers:

   • Direct sales necessitate VAT registrations where goods are stored.
   • Example: A UK company selling into multiple EU countries must manage VAT accordingly, ensuring compliance with the new system.

Example Scenarios for Non-EU Businesses

1. Delta Limited (Amazon UK Sales):

   • Stores goods in the UK and sells across EU.
   • VAT reporting falls partially to Amazon as a deemed supplier.

2. Zeta Limited (Stores in Multiple Countries):

   • Stores goods in France, Italy, and Spain.
   • Requires VAT registration in each storage country.

3. Gamma Ltd (Direct Sales and UK Storage):

   • Direct sales from the UK to EU countries.
   • VAT reporting conforms to export regulations and OSS rules.

Submission of OSS Applications

Initially, OSS returns cannot be submitted digitally. Instead, businesses must fill out forms manually on the respective tax authority’s portal. Here's the basic process:

1. Service and Product Sales Separation: Different VAT rates and treatments require separate listings for services and goods.
2. Foreign vs. Domestic Sales Separation: Transactions must be sorted by the location of end customers and the storage of goods.
3. Sorting by Destination and VAT Rates: Detailed breakdowns of transactions by EU countries and respective VAT rates ensure compliance.

Making OSS Registration Easier

Given the complexities, businesses are encouraged to seek the assistance of tax advisors specializing in e-commerce or FBA. Services like those offered by hellotax can streamline the registration and filing processes, ensuring compliance and reducing administrative burdens.

Conclusion

The OSS represents a substantial evolution in EU VAT compliance for online sellers, aiming to simplify and centralize VAT reporting. While it introduces many benefits, including reduced administrative efforts and consolidated reporting, the initial registration and compliance processes can be complex. Both EU and non-EU sellers need to understand these new regulations and adjust their operations accordingly. By leveraging expert advice and automation tools, businesses can navigate these changes efficiently, ensuring smooth compliance and continued growth in their e-commerce endeavors.

FAQs

Do I need more than one registration after OSS? Yes, VAT numbers are still required in the EU countries where you store goods.

Will I need to report all my sales to OSS? No, only cross-border B2C sales need to be reported.

Is there anything else I need to report besides the OSS return? Yes, you must report domestic sales using the standard country-specific VAT return methods.

How do I register for OSS? Registration is straightforward but needs to be done timely. Consult experts if needed.

Is OSS mandatory? No, OSS is optional. Businesses can continue with standard VAT reporting if preferred.

By understanding and leveraging the OSS system, businesses can streamline VAT obligations, ensuring compliance across multiple jurisdictions with ease.