One Stop Shop – Changes for Online Sellers

Table of Contents

  1. Introduction
  2. Understanding the OSS and Its Benefits
  3. How to Register for the OSS
  4. What is Not Included in the OSS?
  5. Impact on EU and Non-EU Online Sellers
  6. Submitting OSS Returns
  7. Conclusion
  8. Frequently Asked Questions (FAQ)

Introduction

Imagine being an online business owner in the European Union (EU), navigating through the intricate web of Value-Added Tax (VAT) regulations across multiple countries. Your dream of expanding into different EU markets is dampened by the administrative nightmare of handling VAT returns for each country. What if there was a simplified way to manage your VAT obligations across the EU?

Enter the One Stop Shop (OSS), a game-changer introduced as part of the EU VAT reform for e-commerce from July 2021. This regulation aims to streamline the VAT return process for online sellers by allowing them to handle their EU VAT responsibilities through a single portal. But what exactly does this mean for your business?

In this post, we will dive deep into the OSS, exploring its benefits, registration process, exclusions, and its impact on both EU-based and non-EU sellers. By the end, you'll have a comprehensive understanding of how OSS can simplify your VAT compliance, enabling you to focus on growing your online business.

Understanding the OSS and Its Benefits

What is the One Stop Shop?

The OSS is an extension of the previously existing Mini One Stop Shop (MOSS) system, which was initially limited to telecommunications, broadcasting, and electronic (TBE) services. From July 2021, the OSS scheme now applies to all business-to-consumer (B2C) services taking place in EU Member States, including all distance sales of goods within the EU. It even introduces a separate scheme for low-value goods imported from outside the EU, known as the Import One Stop Shop (IOSS).

Key Benefits of the OSS

The OSS is designed to simplify VAT return filing for e-commerce businesses by offering a centralized reporting system. Here are the primary benefits:

  1. Unified VAT Return: Sellers can submit a single VAT return for all their EU sales, significantly reducing administrative hassle.
  2. Single VAT Payment: Payments can be consolidated into one, minimizing transaction complexities.
  3. Elimination of Individual Country Registration: For businesses storing goods in their home country and selling them into other EU countries without storing there, the need to register for VAT in each country of sale is removed.

Short-Term Challenges

While the long-term benefits are clear, the initial transition may seem complex as tax offices and businesses adapt to the new system. Early registration and understanding the new rules are crucial for a smooth transition.

How to Register for the OSS

Registration Process

To use the OSS, businesses must register via the Federal Central Tax Office (BZSt) online portal. Here’s what you should know:

  1. Timelines: Registration must be completed by the end of a quarter to use the OSS in the following quarter.
  2. Portal Access: Access the BZSt online portal, also known as the BOP, using a certificate file.
  3. Form Submission: Complete the "Registration notice for participation in the OSS EU regulation" form under the "Forms and Services" section.
  4. Confirmation: The BZSt will confirm your registration in writing. Keep in touch with your tax advisor if you encounter any complexities.

Important Considerations

Late registration or missing required details can delay your access to the OSS. Ensure you start the process early and seek professional advice if needed.

What is Not Included in the OSS?

Despite its broad applicability, the OSS has exclusions that require separate reporting:

  1. Domestic Sales: These must still be reported through a standard VAT return in each respective country.
  2. Imports, Purchases, and B2B Sales: These transactions are not covered by OSS and need separate VAT reporting.
  3. Goods Stored in Multiple Countries: If you store goods in several EU countries, you still need individual VAT registrations for each storage location.

Impact on EU and Non-EU Online Sellers

Changes for EU Sellers

For EU-based businesses, the most significant change under the OSS is the abolition of distance sales thresholds for markets across the continent. Here’s what it means for different scenarios:

Example: Alpha Services

  • Scenario: German company selling to France, Italy, and Spain, storing goods only in Germany.
  • Impact: VAT registration required only in Germany, with sales reports consolidated through OSS.

Example: Beta Products

  • Scenario: German company storing goods in four EU countries.
  • Impact: Requires VAT registration in each country where goods are stored, as each storage location necessitates a separate VAT return.

Changes for Non-EU Sellers

Non-EU sellers will also experience significant changes, particularly regarding distance sale thresholds and reporting obligations for goods stored within the EU:

Example: Delta Limited

  • Scenario: Non-EU company selling via Amazon UK to EU countries.
  • Impact: Needs VAT registration in the UK. Sales to EU countries require VAT compliance through Amazon as a deemed supplier.

Example: Gamma Ltd

  • Scenario: Non-EU company selling directly through a website, with no EU storage.
  • Impact: Home VAT registration in the UK, with VAT on EU sales handled through customs duties paid by end consumers.

Submitting OSS Returns

Manual Submission Process

Initially, OSS returns cannot be submitted digitally. Instead, returns must be filled out manually via the BZSt portal's “My BOP” section. Here are the steps:

  1. Separate Services and Products: Differentiate between chargeable services and product sales.
  2. Segregate Foreign and Domestic Sales: Distinguish sales to German customers from other EU sales.
  3. Categorize Transactions: Sort sales according to EU countries and applicable VAT rates.

Automating OSS Compliance

To simplify this process, consider partnering with tax advisors experienced in e-commerce VAT compliance, such as hellotax. These professionals can help automate transaction separation, data quality control, and the submission of OSS notifications.

Conclusion

The introduction of the One Stop Shop (OSS) is a pivotal moment for e-commerce businesses operating within the EU. While there are some short-term complexities, the long-term benefits of simplified VAT compliance are immense. By understanding the registration process, knowing what transactions are excluded, and evaluating how the OSS impacts both EU and non-EU sellers, you can fully leverage this new system to your business's advantage.

For any uncertainties or to streamline the OSS registration and filing process, reaching out to specialized tax advisors like hellotax can be highly beneficial. Embrace the OSS to minimize administrative burdens and focus on scaling your e-commerce operations across the EU.

Frequently Asked Questions (FAQ)

Do I need more than one registration after OSS? Yes, you need to register for VAT numbers in your home country and all EU countries where you store goods.

Will I need to report all my sales in the OSS report? No, only cross-border B2C (Business to Consumer) sales are included. Domestic sales require separate VAT returns.

How do I register for OSS? You can register through the respective OSS portal in your home country. Specialized services like hellotax can assist with registrations in multiple countries.

Can non-EU businesses use OSS reporting? Yes, non-EU businesses can register for the OSS in a chosen EU country where they have VAT registration.

Do I still need to file EC reports and PL SAF-T reports? Yes, B2B cross-border transactions must be reported separately from the OSS.

Is OSS mandatory? No, it’s optional. However, using OSS can significantly reduce administrative tasks by consolidating VAT reporting.

Do not let the complexities of VAT compliance slow down your e-commerce growth. Embrace the OSS and take your business to new heights with a streamlined and efficient tax process.