Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- Key Benefits of OSS
- Registration Process for OSS
- What is Excluded from OSS?
- Impact on EU-Based Sellers
- Impact on Non-EU Sellers
- Common Scenarios for VAT Reporting
- Submission of OSS Returns
- Conclusion
- Frequently Asked Questions (FAQ)
Introduction
Are you an online seller navigating the complexities of VAT within the EU? With the introduction of the One Stop Shop (OSS) on July 1st, 2021, significant changes have come into effect, reshaping the landscape for distance sales and VAT reporting. For many businesses, these changes promise simplification, but the transition can seem daunting. This guide aims to help you understand how OSS affects your business, the benefits it offers, and the steps to ensure compliance.
By the end of this article, you will have a thorough understanding of the OSS system, including its key benefits, registration process, and how it impacts both EU-based and non-EU-based sellers. This comprehensive overview will help you navigate the new rules with confidence and make informed decisions for your business.
What is the One Stop Shop (OSS)?
The One Stop Shop (OSS) is an extension of the existing Mini One Stop Shop (MOSS) that was previously available for telecommunications, broadcasting, and electronic services (TBE). The new OSS system expands this scope to include all B2C services and distance sales of goods within the EU, as well as certain domestic supplies facilitated by electronic interfaces. Additionally, the Import One Stop Shop (IOSS) was introduced to simplify VAT declaration and payment for low-value goods imported from outside the EU.
Key Benefits of OSS
At its core, OSS aims to simplify the VAT return filing process. Here are the primary benefits:
Unified VAT Reporting
Instead of registering for VAT in each EU country where sales occur, businesses can now submit a single OSS VAT return for all applicable sales across the EU. This significantly reduces administrative burden and streamlines compliance processes.
Elimination of Distance Sales Thresholds
The old distance sales thresholds, which required businesses to register for VAT in multiple countries once certain sales limits were reached, have been abolished. Under OSS, a single EU-wide threshold of €10,000 applies, simplifying the threshold management.
Simplified Payment Process
Businesses will only need to make one VAT payment per return period, covering all applicable sales within the EU, reducing the complexity and cost of multiple payments to different tax authorities.
Registration Process for OSS
To leverage the benefits of OSS, businesses must register via the Federal Central Tax Office (BZSt) in their home country or the designated portal for non-EU businesses. Here's a step-by-step guide:
Step 1: Initial Registration
Register on the OSS portal of the relevant tax authority. This may involve creating a user account and logging in using a certificate file. Ensure all required data is submitted accurately.
Step 2: Confirmation and Setup
Once registered, you will receive a written confirmation from the tax authority, detailing declaration periods and payment deadlines.
Step 3: Periodic Reporting
Submit your OSS VAT returns through the designated online portal. Be prepared to segregate sales data according to country of supply, type of product or service, and applicable VAT rates.
Step 4: Ongoing Compliance
Maintain accurate records and ensure timely submission of VAT returns. Contact your tax advisor if uncertainties arise to ensure compliance with all local and EU-wide regulations.
What is Excluded from OSS?
While OSS streamlines many aspects of VAT reporting, it does not cover all transactions. Below are the key exclusions:
Domestic Sales
Domestic sales within a single country must be reported through the standard VAT return in that country.
Imports and B2B Sales
Imports, purchases, and Business-to-Business (B2B) sales remain outside the scope of OSS and must be reported through traditional VAT return methods.
Impact on EU-Based Sellers
For EU-based businesses, the OSS system brings both opportunities and requirements:
Single Country Storage
Businesses storing goods in a single EU country benefit from the €10,000 distance sales threshold, simplifying VAT compliance as additional registrations in other countries are no longer necessary for distance sales.
Multi-Country Storage
If goods are stored in multiple EU countries, VAT registration is still required in each country where storage occurs. Domestic sales from storage locations must be reported through the existing VAT return processes in each respective country.
Impact on Non-EU Sellers
Non-EU sellers face different scenarios under the OSS system:
Direct Sales Without Deemed Supplier
Non-EU companies selling directly to EU consumers without using platforms like Amazon or eBay must obtain VAT registrations if storing goods within the EU. Distance sales thresholds are abolished, but direct sales from outside the EU will attract customs duties and import VAT.
Sales Through Deemed Suppliers
If using a deemed supplier (marketplace), VAT compliance shifts to the marketplace. Non-EU sellers will need VAT numbers in each country where storage occurs, and distance sales will need to be reported accordingly.
Common Scenarios for VAT Reporting
Example 1: Alpha Services
Alpha Services, a German-based company, stores goods only in Germany but sells to France, Italy, and Spain. Under OSS, no additional VAT registration is needed in these countries. The company will utilize OSS for reporting cross-border sales while maintaining its VAT number in Germany for domestic transactions.
Example 2: Beta Products
Beta Products operates similarly but stores goods in Germany and other EU countries like France, Italy, and Spain. Beta must register for VAT in all storage countries and report domestic sales through local VAT returns alongside OSS for cross-border sales.
Example 3: Delta Limited (Non-EU)
Delta Limited, a non-EU company selling via Amazon UK, needs a VAT registration in the UK for its home sales. For goods shipped from the UK to EU consumers, Delta must report these transactions under OSS, with Amazon acting as the deemed supplier.
Submission of OSS Returns
As of the third quarter of 2021, OSS returns must be submitted manually through the tax authority's portal. Automated submission options are anticipated but not yet available in all regions. Businesses should prepare to:
Step 1: Data Preparation
Segment sales data by service/product type, country of destination, and applicable VAT rates. Ensure separation of domestic and foreign sales.
Step 2: Manual Submission
Enter the prepared data into the tax authority's portal, ensuring accuracy and completeness.
Step 3: Compliance Confirmation
Regularly review submissions to ensure compliance. Utilize tax advisory services to navigate complex scenarios and prevent errors.
Conclusion
The introduction of the One Stop Shop (OSS) marks a significant shift in the EU VAT landscape, offering streamlined processes and reduced administrative burdens for online sellers. By understanding the specifics of registration, reporting, and compliance, businesses can navigate this transition smoothly and leverage the benefits of this simplified system. Whether you are an EU or non-EU seller, grasping these new requirements will be crucial for maintaining compliance and optimizing your operations in the dynamic e-commerce market.
Frequently Asked Questions (FAQ)
Q1: Do I need more than one registration after OSS? A1: Yes, you will need to apply for VAT numbers in each EU country where you store goods.
Q2: Will I need to report all my sales in OSS? A2: No, only cross-border B2C sales are included in the OSS report. Domestic sales require separate standard VAT reporting.
Q3: Is OSS reporting mandatory? A3: No, you can continue with standard reporting but may need to register in all EU states where you sell.
Q4: Who can file my OSS report? A4: Authorized persons, such as licensed accountants or tax advisors, can file your OSS report. Services like hellotax offer assistance in various countries.
Q5: Can non-EU businesses use OSS reporting? A5: Yes, non-EU businesses can choose an EU country for OSS registration but need a standard VAT registration in that country.
For more information, consider consulting with a tax advisor to ensure you meet all OSS compliance requirements and make the most of the new VAT regulations.
