Table of Contents
- Introduction
- Understanding the One Stop Shop (OSS)
- What is Excluded?
- Submitting OSS Applications
- Conclusion
- Frequently Asked Questions (FAQs)
Introduction
Imagine you are an online seller in Germany, used to navigating a labyrinthine maze of VAT requirements. Now, picture being told you could simplify this process dramatically—sounds appealing, right? This is precisely what the EU’s "One Stop Shop" (OSS) aims to achieve. With reforms implemented from July 2021, this new regulation seeks to streamline VAT return processes for businesses involved in cross-border sales within the EU. Whether you're a seasoned e-commerce seller or a newcomer trying to make sense of it all, understanding these changes is crucial.
In this blog post, we'll delve deep into how the OSS transforms VAT reporting, outlining key benefits and registration processes. We'll also explore its implications for both EU and non-EU sellers, providing practical examples to illustrate these changes. If you're questioning whether this applies to you or how to navigate the new system, read on to find out everything you need to know.
Understanding the One Stop Shop (OSS)
Background and Evolution
Initially, the Mini One Stop Shop (MOSS) system was introduced for business-to-consumer (B2C) services in the telecommunications, broadcasting, and electronic (TBE) sectors. This allowed businesses to declare and pay VAT in a single Member State for services provided across the EU. From July 2021, the OSS expanded this framework to include all B2C services and goods, aiming for an all-encompassing VAT return process across the EU.
Key Benefits
The OSS promises several advantages. Firstly, businesses can now handle VAT returns through a single online portal in their home country, rather than registering and filing in each EU state they sell to. For example, a German company selling to multiple EU countries but storing goods only in Germany would find their VAT reporting significantly simplified. Instead of multiple registrations, businesses only submit one home VAT return and one OSS return per period.
Registration Essentials
To use the OSS, timely registration is crucial. If intending to start from July 1st, 2021, businesses needed to register by June 30th. Similarly, to start from October 1st, the registration deadline was the end of September. This ongoing cycle means businesses must plan ahead to ensure seamless integration into the system.
Registration occurs via the Federal Central Tax Office (BZSt) portal, where businesses log in using a certificate file. Given potential delays in account setup, early registration is advised to avoid last-minute issues. After submission, businesses receive written confirmation and details on declaration periods and payment deadlines.
What is Excluded?
Not all transactions fall under the OSS. For instance, domestic sales remain excluded and require separate reporting via standard VAT returns. Additionally, imports, purchases, and business-to-business (B2B) transactions are outside the OSS's scope and need separate reporting methods.
Impact on EU-Based Sellers
One of the most significant changes is the abolition of old distance sales thresholds. An EU-wide threshold of €10,000 now applies to all EU companies, simplifying processes for those shipping goods without storing them in multiple locations. However, companies with storage in several EU countries still need VAT numbers for each storage location.
Practical Scenarios for EU Sellers
Example 1 – Alpha Services:
A German company storing goods solely in Germany and shipping to France, Italy, and Spain would only need a home VAT number and would handle everything through OSS, avoiding separate registrations in each of these countries.
Example 2 – Beta Products:
Storing goods in multiple countries (Germany, France, Italy, Spain), Beta Products must register for VAT in all these countries, despite being a single entity.
Impact on Non-EU Sellers
Non-EU companies face similar rules with an added layer of complexity. Without EU storage, goods are deemed imports, incurring customs duties for end consumers. Such sellers also need VAT numbers where goods are stored.
Practical Scenarios for Non-EU Sellers
Example 1 – Delta Limited:
A non-EU company using Amazon UK to store and ship products to various EU countries would need a VAT number in the UK. Sales to other countries like Italy, France, and Spain would follow specific steps ensuring VAT compliance through Amazon as a deemed supplier.
Example 2 – Zeta Limited:
Zeta Limited, storing goods in multiple EU countries and selling via Amazon, would need to manage VAT registrations in each storage location, integrating OSS to simplify cross-border compliance.
Submitting OSS Applications
Initially, OSS returns weren't fully digital. As of Q3 2021, businesses had to manually submit forms via the Federal Central Tax Office portal, although an automated system was planned. Specific data requirements included separating sales by service vs. product, foreign vs. domestic sales, and sorting by EU country and VAT rate. Special automated solutions from tax advisors could simplify these tasks significantly.
Conclusion
The OSS represents a significant shift towards simplifying VAT obligations for online sellers across the EU. By allowing businesses to handle multiple obligations through a single interface, the OSS reduces administrative burdens and streamlines operations, albeit with some initial teething problems. Whether you are an EU-based or non-EU seller, understanding these changes and integrating them into your business processes is crucial for seamless compliance and efficient operations in the already complex world of e-commerce.
If you're feeling overwhelmed by these changes or need assistance with registration and compliance, professional services like hellotax offer specialized guidance, helping you navigate this new landscape effectively.
Frequently Asked Questions (FAQs)
Do I need more than one registration after OSS? You will need to apply for VAT numbers in your home country within the EU or your nominated country if you are a non-EU seller. Additionally, you must register for VAT in any EU countries where you store goods.
Will I need to report all my sales through the OSS report? No, only cross-border B2C sales are reported via OSS.
Is there anything else I need to report besides OSS returns? Yes, domestic sales must still be reported through standard VAT returns in the respective countries where these sales occur.
How do I register for OSS? The registration for OSS involves accessing the Federal Central Tax Office (BZSt) portal and entering the required data. Early registration is recommended to avoid delays.
Do non-EU businesses use OSS reporting as well? Yes, non-EU businesses can opt for OSS reporting, provided they have a standard VAT registration in an EU member state.
Implementing OSS can simplify your VAT reporting significantly, leaving more time for you to focus on growing your business. If you require further assistance, don't hesitate to contact professional tax advisors who can guide you through this transition seamlessly.
