Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- Key Benefits of OSS
- Registering for OSS
- OSS and EU-Based Online Sellers
- OSS and Non-EU Online Sellers
- Reporting and Filing VAT under OSS
- Common Scenarios and Examples
- Conclusion
- FAQ Section
Introduction
Have you ever wondered how the recent updates to the VAT system in the EU impact online sellers? If you're an e-commerce entrepreneur dealing with cross-border sales within the European Union, understanding the new One Stop Shop (OSS) regulation is crucial for your business. Introduced as part of the EU VAT reform in July 2021, the OSS aims to simplify the tax filing process for businesses engaging in cross-border selling. In this detailed guide, we will break down the changes brought by the OSS, its key benefits, and what it means for you, whether you're based in the EU or outside. By the end of this post, you'll have a comprehensive understanding of the OSS, making VAT compliance considerably less daunting.
What is the One Stop Shop (OSS)?
The OSS is an extension and overhaul of the previous Mini One Stop Shop (MOSS) system. Initially, MOSS was designed for service providers offering telecommunications, broadcasting, and electronic (TBE) services within the EU. From 1st July 2021, the scope of the OSS was significantly widened. It now covers all business-to-consumer (B2C) services, as well as all intra-EU distance sales of goods and certain domestic supplies facilitated by electronic interfaces. Additionally, a new scheme called the Import One Stop Shop (IOSS) was introduced for the declaration and payment of VAT on low-value goods imported from outside the EU.
Key Benefits of OSS
The primary goal of the OSS is to simplify the European VAT return system for businesses. While the process may seem complex initially, particularly as tax offices and businesses transition to the new system, the long-term benefits are substantial.
Here are some of the primary benefits:
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Single VAT Return: Businesses that store goods in their home country but sell across multiple EU member states will now only have to submit one VAT return in their home country and one OSS VAT return per period.
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Unified Threshold: The previous country-specific distance sales thresholds have been abolished. There is now a single EU-wide threshold of 10,000 euros for businesses with single-country storage.
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Facilitated VAT Compliance: Businesses can now manage their VAT obligations across the EU through a single online portal. This reduces the administrative burden and complexity associated with multi-country VAT registrations.
Registering for OSS
Registering for the OSS is a streamlined process, although it requires specific steps to be followed to avoid delays. The registration can be completed via the OSS portal of the Federal Central Tax Office (BZSt) in your country. Here’s how you can get started:
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Access the Portal: Log in to the BZSt online portal using a certificate file. Most businesses already have access data to this portal due to other tax obligations.
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Complete the Form: Under "Forms and Services," you will find the "Registration notice for participation in the OSS EU regulation." Enter the required data and submit the form.
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Confirmation: Upon successful submission, the BZSt will confirm your OSS registration in writing.
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Adhere to Deadlines: Registration needs to be completed by the end of a quarter to use OSS from the next quarter onwards.
OSS and EU-Based Online Sellers
For EU-based online sellers, the OSS brings several significant changes:
Abolition of Distance Sales Thresholds
The old distance sales thresholds have been replaced by a single EU-wide threshold of 10,000 euros. Consequently, if you store goods in one EU country and sell to others, you will not need multiple VAT registrations, provided you do not exceed this threshold.
Domestic Sales
Domestic sales are not included in the OSS and must be reported separately via standard VAT returns in the respective countries.
Multi-Country Storage
If your business stores goods in multiple EU countries, you will still need VAT registrations for each country where storage takes place.
New Reporting Obligations
Although the OSS simplifies cross-border transactions, domestic sales and standard B2B (business-to-business) transactions need to be reported via traditional VAT returns.
OSS and Non-EU Online Sellers
Non-EU online sellers face similar changes to their VAT obligations:
Removal of Distance Sales Thresholds
Like their EU counterparts, non-EU sellers will no longer be subject to individual country thresholds, simplifying VAT compliance.
Export and Import Duties
For businesses exporting goods to EU consumers, end customers will be charged customs duties and import taxes on their purchases.
Determining Deemed Supplier Status
Non-EU sellers using marketplaces like Amazon or eBay should check if these platforms qualify as deemed suppliers, which would impact how VAT is reported.
Reporting and Filing VAT under OSS
Submitting OSS returns is currently not automated across all EU countries. Sellers must manually input sales data into the portal of the Federal Central Tax Office (BZSt). This involves:
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Service and Product Sales Separation: Differentiate between services and products sold at a distance, considering distinct VAT rates and treatments.
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Domestic vs. Foreign Sales: Separate sales to domestic customers from those to foreign EU customers.
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Sorting by Country and VAT Rates: Clearly categorize transactions by each EU country and the applicable VAT rates.
Common Scenarios and Examples
Example 1: Alpha Services (Single Country Storage)
Alpha Services, a German business, sells to France, Italy, and Spain without storing goods outside Germany. They will use the OSS to avoid multiple VAT registrations elsewhere.
Example 2: Beta Products (Multi-Country Storage)
Beta Products stores goods in Germany, France, Italy, and Spain. They need to retain VAT registrations in all these countries, reporting sales under OSS for non-domestic transactions.
Example 3: Delta Limited (Non-EU Seller on Amazon)
Delta Limited, a non-EU company, sells via Amazon UK to EU countries, requiring a VAT number in the UK. They must report sales from the UK to EU countries under OSS.
Example 4: Gamma Ltd (Non-EU Direct Sales)
Gamma Ltd sells to the EU from the UK without using deemed suppliers, making customers liable for customs duties.
Example 5: Epsilon Ltd (Non-EU Seller with Multi-Country Storage)
Epsilon Ltd stores goods in the UK and France and sells to Italy and Spain. They need VAT numbers in the UK and France and use OSS for cross-border sales.
Conclusion
The OSS regulation is a significant step forward in simplifying VAT compliance for online sellers in the EU. By offering a single platform for VAT reporting across multiple countries, the OSS reduces the burden of multiple VAT registrations and filings. While the initial transition may present challenges, the long-term benefits make it a valuable tool for e-commerce businesses. Whether you're an EU-based seller or a non-EU seller, understanding and leveraging the OSS can streamline your business operations and enhance compliance.
FAQ Section
Do I need more than one registration after OSS? Yes, for countries where you store goods, separate VAT registrations are required.
Will I need to report all my sales to OSS? Only cross-border B2C sales are reported under OSS.
Is OSS mandatory? No, but it is recommended to minimize administrative costs.
Can non-EU businesses use OSS? Yes, they can register in a chosen EU country for OSS.
Can I include my expenses in OSS? No, OSS reporting is solely for B2C cross-border sales.
Can I deregister my VAT ID in countries I do not store in? Yes, as of July 2021, OSS can cover these sales, allowing for VAT ID deregistration.
Understanding OSS and its requirements will position your business to better navigate the evolving landscape of e-commerce in the European Union. Make sure to leverage professional advice where necessary to ensure your compliance and optimize your operations.
