Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- Benefits of the OSS for Online Sellers
- Registration Process for the OSS
- Specific Exclusions from the OSS
- Implications for EU-Based Sellers
- Implications for Non-EU Sellers
- How to Submit OSS Applications
- Conclusion
- Frequently Asked Questions
Introduction
With the globalization of eCommerce, tax regulations have struggled to keep up. Starting July 1, 2021, the European Union introduced the One Stop Shop (OSS) system, an extension and enhancement of the Mini One Stop Shop (MOSS) regulation. This expansive reform aims to streamline VAT (Value Added Tax) collection and reporting for businesses operating across multiple EU member states. In this blog post, we delve into the intricacies of the OSS, its implications for online sellers, and how it endeavours to simplify VAT compliance in the EU.
What is the One Stop Shop (OSS)?
The OSS replaces the former Mini One Stop Shop (MOSS) system, originally designed for service providers of telecommunications, broadcasting, and electronic (TBE) services. From July 1, 2021, the OSS extends its scope to cover all B2C (business-to-consumer) services and distance sales of goods within the EU. This includes specific domestic supplies facilitated by electronic interfaces under qualifying conditions. An additional scheme, the Import One Stop Shop (IOSS), addresses VAT for low-value goods imported from outside the EU.
Benefits of the OSS for Online Sellers
While the initial transition to OSS may pose challenges due to new registration processes and compliance learning curves, several long-term benefits make it a significant improvement:
- Unified Reporting: Businesses can now submit a single VAT return per period, consolidating their sales across multiple EU countries.
- Reduction of Multiple Registrations: Sellers no longer need to register for VAT in each EU country where they make sales if they do not store goods there.
- Simplified Compliance: OSS aims to make ongoing VAT compliance less cumbersome by centralizing administration and reporting requirements.
Registration Process for the OSS
To start using the OSS, businesses must register by the end of the preceding quarter. Registration is conducted through the Federal Central Tax Office's (BZSt) online portal:
- Access the BZSt Portal: Sellers need to log in using a certificate file. Most businesses already have access due to other tax obligations.
- Complete the Registration Form: Found under "Forms and Services," the registration notice for the OSS EU regulation must be filled with all relevant data.
- Confirmation and Ongoing Compliance: After submission, the BZSt confirms the application. Businesses then receive information on declaration periods and payment deadlines.
Consulting with a tax advisor can ensure accuracy and adherence to all formalities during registration.
Specific Exclusions from the OSS
Certain transactions require separate reporting and are not included in the OSS framework:
- Domestic Sales: Must be reported via the standard VAT return.
- Imports and Purchases: These transactions require traditional VAT return filing.
- B2B Sales: Business-to-business transactions are excluded from OSS and need reporting by conventional means.
Implications for EU-Based Sellers
Elimination of country-specific VAT thresholds is a major shift. For sellers operating across multiple EU countries but storing goods only in their home country, a single EU-wide threshold of €10,000 applies. Here’s how this affects businesses:
Example Scenarios
Alpha Services: Single Country Storage
Situation: Alpha Services, based in Germany, sells to France, Italy, and Spain without storing goods outside Germany.
Impact:
- VAT number in Germany only.
- Sales to other EU countries reported via OSS, eliminating the need for additional VAT registrations.
Beta Products: Multi-Country Storage
Situation: Beta Products stores goods not only in Germany but also in France, Italy, and Spain.
Impact:
- Requires VAT registrations in all four countries for storage purposes.
- OSS simplifies reporting of cross-border sales, but storage-based registrations remain necessary.
Implications for Non-EU Sellers
Non-EU sellers face similar distance sales threshold eliminations:
- Warehouse or Marketplace Facilitator: Sales through platforms like Amazon often classify the platform as a deemed supplier.
- Direct Sales: Non-EU sellers exporting directly to EU consumers must manage imports and VAT through the IOSS.
Example Scenarios
Delta Limited: Selling via Amazon UK
Situation: Delta Limited ships from Amazon UK to EU customers.
Impact:
- Requires VAT number in the UK.
- Amazon, as a deemed supplier, manages VAT compliance for cross-border sales.
Zeta Limited: Storing in Multiple EU Countries
Situation: Zeta Limited, a UK-based company, stores and sells products in multiple EU countries.
Impact:
- Requires VAT registration in each country where goods are stored.
- Utilizing OSS for cross-border sales streamlines compliance efforts.
How to Submit OSS Applications
Initially, OSS returns could not be submitted digitally; businesses used manual forms available on the BZSt portal. Expected data to be included:
- Service and Product Sales: Reported separately due to differing VAT treatment.
- Domestic vs. Foreign Sales: Separate reporting required for sales within Germany versus other EU countries.
- Country-Specific VAT Rates: Detailed breakdowns necessary by country and applicable VAT rates.
Given these detailed reporting requirements, consulting a specialized tax advisor, such as hellotax, can greatly simplify the OSS submission process and ensure compliance.
Conclusion
The One Stop Shop represents a significant step towards simplifying VAT compliance within the EU. While the transition may initially seem complex, the long-term benefits of reduced administration, unified reporting, and streamlined tax obligations make it a worthwhile endeavor for online sellers. By understanding and effectively navigating the OSS, businesses can focus more on growth and less on regulatory hurdles.
Frequently Asked Questions
Do I need more than one registration after OSS?
- Yes, for storage in multiple EU countries, separate VAT registrations are required.
Will I need to report all my sales to OSS?
- No, only cross-border B2C sales need reporting via OSS.
Is there anything else I need to report besides the OSS return?
- Domestic sales still need to be reported through standard VAT returns.
How to register for OSS?
- Registration can be done online via the Federal Central Tax Office by the end of each quarter.
Can non-EU businesses use OSS?
- Yes, provided they have standard VAT registration in an EU country.
By embracing these changes and leveraging resources like tax advisors, businesses can ensure seamless compliance and focus on leveraging the extended market potential the EU offers.
