Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- How to Register for OSS
- What's Not Included in OSS?
- Changes for EU-Based Online Sellers
- Changes for Non-EU Online Sellers
- Submitting OSS Applications
- FAQs
- Conclusion
The European Union's introduction of the One Stop Shop (OSS) regulation has evolved the landscape of VAT reporting for online merchants. Implemented in July 2021, this ambitious initiative extends uniformity in VAT returns across EU member states, significantly altering both compliance burdens and obligations for sellers. In this post, we will provide a comprehensive breakdown of what the OSS entails, its operational scope, and tangible benefits for businesses.
Introduction
Imagine running an online business that serves customers across multiple European countries. The complexity of filing separate VAT returns for each country can feel overwhelming. This is where the EU's One Stop Shop (OSS) comes into play. By centralizing the VAT registration and submission processes, OSS aims to simplify tax compliance significantly for cross-border e-commerce. However, understanding whether OSS is suitable for your business and how exactly it works can be a challenge. This blog post covers all aspects of OSS from registration to reporting, easing the journey for online sellers navigating the new tax landscape.
What is the One Stop Shop (OSS)?
Before the OSS, the Mini One Stop Shop (MOSS) allowed telecommunication, broadcasting, and electronic service providers to declare and pay VAT through a single EU member state. From July 2021, the OSS expanded this framework to encompass all B2C (business-to-consumer) services and distance sales of goods within the EU. It now also includes domestic supplies facilitated by electronic interfaces under specific conditions.
Key Benefits of the OSS
The OSS system offers several crucial advantages:
- Simplified Filing: Businesses can consolidate their EU VAT returns into a single submission, easing administrative burdens.
- Centralized Payments: Only one payment per return period is required, streamlining financial transactions.
- Enhanced Compliance: The OSS simplifies compliance, reducing the risk of penalties related to missed deadlines or inaccuracies across multiple jurisdictions.
How to Register for OSS
The registration process for OSS is relatively straightforward but involves a few critical steps that must be followed precisely:
- Initial Registration: Begin by registering on the Federal Central Tax Office (BZSt) portal using existing access data or by creating a new user account if needed.
- Submission: Complete the “Registration notice for participation in the OSS EU regulation” form and submit it online.
- Confirmation: Once the application is reviewed and approved, you will receive written confirmation and further details on declaration periods and payment deadlines.
Deadlines to Remember
- Q3 Registration Deadline: Register by June 30th for OSS usage starting July 1st.
- Q4 Registration Deadline: Register by September 30th for OSS usage starting October 1st.
Adhering to these deadlines ensures smooth transitions between quarters and avoids potential registration delays.
What's Not Included in OSS?
Despite its broad coverage, OSS does have specific exclusions:
- Domestic Sales: Must still be reported separately through standard VAT returns.
- Imports and Purchases: B2B transactions fall outside the OSS remit.
- Sales via Storage: Goods stored in several EU countries still require individual VAT registrations in each of those countries.
Changes for EU-Based Online Sellers
The primary change for EU-based sellers is eliminating the old distance sales thresholds, replaced by a single EU-wide distance sale threshold of €10,000 annually. For businesses storing goods in multiple countries, VAT registrations in each country of storage remain necessary.
Case Examples
Example 1: Alpha Services
A German-based company sells goods online to France, Italy, and Spain but stores them only in Germany. With OSS, Alpha Services needs only a German VAT number, as goods are not stored in other countries.
Example 2: Beta Products
This German company sells and stores goods in four EU countries (Germany, France, Italy, and Spain). Consequently, VAT registrations are required in all four countries.
Changes for Non-EU Online Sellers
For Non-EU online sellers, OSS simplifies compliance by abolishing individual country thresholds. However, obligations still exist:
- Warehouse Storage: Requires VAT registration in each EU country where goods are stored.
- Domestic Sales: Must be reported through standard VAT returns.
Non-EU Seller Scenarios
Example 1: Delta Limited
Delta Limited sells through Amazon UK to various EU countries. Since Amazon acts as a deemed supplier, Delta Limited needs a UK VAT number and reports sales through Amazon's platform.
Example 2: Epsilon Ltd
Epsilon Ltd, a non-EU seller, stores goods in the UK and France and sells to Italy and Spain. The company needs VAT numbers for the UK and France but not for Italy and Spain.
Submitting OSS Applications
While the OSS aims for simplicity, initial submission challenges persist. Currently, the OSS forms must be completed manually via the BZSt portal, although automated solutions are anticipated.
Steps for Submission
- Classifying Sales: Distinguish sales of services from product sales.
- Separating Sales Locations: Differentiate between sales to domestic and foreign customers.
- Itemizing Transactions: Organize sales by country and applicable VAT rates.
A robust tax advisory service like hellotax can significantly ease this process, managing both registration and ongoing compliance.
FAQs
Do I need more than one registration after OSS? Yes, a VAT registration is required in all EU countries where goods are stored.
What sales are reported in OSS? Only cross-border B2C sales are included in the OSS report.
Can non-EU businesses use OSS? Yes, non-EU businesses can register in an EU country of their choice but need a standard VAT registration in that country.
Is OSS mandatory? No, businesses can continue with standard reporting, but OSS is designed to reduce administrative costs.
How should B2B transactions be reported? B2B transactions are excluded from the OSS report and should be submitted through standard methods.
Conclusion
The OSS (One Stop Shop) regulation marks a significant advancement in simplifying VAT compliance for online sellers. By consolidating VAT reporting and payments, it alleviates much of the administrative burden associated with cross-border sales. Registering for and correctly utilizing the OSS is critical for businesses seeking to optimize their tax processes. To navigate the OSS efficiently, consider leveraging professional tax advisory services, ensuring prompt and accurate compliance.
