Table of Contents
- Introduction
- Background and Current Relevance
- Purpose of the Blog Post
- Key Benefits of OSS
- OSS Registration Process
- OSS Exclusions
- Changes for EU Online Sellers
- Impacts on Non-EU Online Sellers
- Submission of OSS Applications
- Conclusion
- FAQ Section
Introduction
In the rapidly evolving world of e-commerce, staying abreast of the latest regulations is crucial for online sellers operating across Europe. One such significant change is the introduction of the EU's "One Stop Shop" (OSS) regulation from July 2021, a sweeping reform designed to streamline VAT compliance for businesses engaged in cross-border transactions within the EU. But what exactly does OSS entail, and how does it impact online sellers? This comprehensive guide will walk you through the nuances of OSS, its benefits, and the practical steps for compliance.
Background and Current Relevance
The OSS regulation stems from the extended version of the Mini One Stop Shop (MOSS). Prior to July 2021, MOSS allowed service providers in the telecommunications, broadcasting, and electronic (TBE) services sectors to declare and pay VAT in a single EU member state, even when operating across other EU states. However, with the advent of OSS, this scheme extends to all business-to-consumer (B2C) services and distance sales within the EU. This expansion aims to simplify VAT return procedures, creating a uniform platform that eliminates the need for individual VAT registrations in multiple EU countries for eligible businesses.
Purpose of the Blog Post
This blog post aims to demystify the OSS regulation, providing online sellers with a clear understanding of how it works, who it impacts, and the steps required for compliance. By the end of this post, you'll have a grasp on the key benefits of OSS, the registration process, and the transactions that fall outside its scope. We'll also delve into practical examples illustrating OSS's implications for both EU-based and non-EU-based online sellers.
Key Benefits of OSS
One of the primary advantages of the OSS regulation is its potential to simplify VAT return filings for businesses. Here are the main benefits:
- Streamlined Reporting: Companies storing goods in their home country but selling to multiple EU nations can now submit a single home VAT return and one OSS VAT return per period. This reduces the administrative burden significantly.
- Uniform Threshold: The abolishment of old distance sales thresholds means that a single EU-wide threshold of €10,000 now applies, simplifying VAT obligations for small to medium businesses.
- Consolidated Payments: Only one payment is required for each VAT return period, facilitating easier financial management.
OSS Registration Process
The OSS registration process, while intended to be straightforward, does require some preparation:
- Deadline Awareness: Registration must be completed by the end of a quarter to utilize OSS by the next quarter.
- Access to BOP Portal: Registration is done via the Federal Central Tax Office (BZSt) online portal, requiring access credentials that most businesses already possess. New users must create an account, which can be time-consuming.
- Data Submission: Correctly entering all necessary data is crucial, and any ambiguities should be clarified with a tax advisor. Once approved, the BZSt will issue a confirmation along with details on reporting periods and payment deadlines.
OSS Exclusions
It's important to note that certain transactions are not covered by OSS and require separate VAT reporting:
- Domestic Sales: These must still be reported through standard VAT returns.
- Imports and Purchases: These transactions are excluded from OSS filings and follow traditional VAT return methods.
- Business to Business (B2B) Transactions: Like imports, B2B sales are to be reported separately.
Changes for EU Online Sellers
For EU-based sellers, the OSS regulation brings significant changes:
- Threshold Adjustments: The previous country-specific distance sales thresholds are replaced by a unified €10,000 threshold across the EU.
- VAT Registration: Companies storing goods in multiple EU countries must still register for a VAT number in each country of storage. However, sales to countries without storage will fall under the OSS regime.
- Compliance Nuances: Despite OSS, domestic sales and certain other transactions remain subject to standard VAT reporting within their respective countries.
Example Scenario for EU Sellers
Alpha Services: A Germany-based company storing goods only in Germany but selling to France, Italy, and Spain will require a single home VAT number. Using OSS, they won't need VAT registrations in France, Italy, or Spain.
Beta Products: This company stores goods in Germany, France, Italy, and Spain, necessitating VAT registrations in all four countries. OSS will streamline their reporting but will not eliminate the need for these registrations.
Impacts on Non-EU Online Sellers
Non-EU sellers are also affected by the OSS regulation, particularly regarding the elimination of individual distance sales thresholds:
- VAT Obligations: Non-EU sellers without a European business base will remain subject to export regulations, with customs duties and taxes applied to end customers in the EU.
- Storage-Based Registration: Storing goods in multiple EU countries necessitates registration for VAT in each country of storage.
- Marketplace Influence: Selling through deemed suppliers (e.g., Amazon, eBay) introduces specific reporting requirements under the OSS framework.
Example Scenario for Non-EU Sellers
Delta Limited: A non-EU company selling on Amazon UK, which also ships to Italy, France, and Spain, requires a UK VAT registration. OSS simplifies cross-border VAT reporting without the need for additional country-specific registrations.
Epsilon Ltd: This company sells directly through its website and stores goods in both the UK and France. They need VAT numbers in the UK and France and can reclaim import VAT on the French VAT return.
Submission of OSS Applications
Despite the OSS’s promise of simplicity, initial teething problems mean that the submission process for the first OSS quarter (Q3 2021) is not fully digital. Manual entries are still required in many cases, particularly in Germany. Businesses must be prepared to sort and submit detailed sales data manually via the BZSt portal, with attention to service versus product sales and country-specific VAT rates.
Conclusion
The OSS regulation represents a significant step forward in simplifying VAT compliance for online sellers within the EU. While the initial transition may pose challenges, the benefits in terms of reduced administrative burden and unified reporting thresholds are significant. Whether you are an EU-based seller or a non-EU retailer, understanding and leveraging OSS can help streamline your operations and enhance your compliance posture.
For specialized assistance, partnering with a tax advisor experienced in e-commerce VAT regulations can be invaluable. Platforms like hellotax offer comprehensive support, from registration to ongoing compliance, ensuring that your business navigates the changes smoothly.
FAQ Section
Do I need more than one registration after OSS?
Yes, you need to apply for VAT numbers in your home country and any EU countries where you store goods.
Will I need to report all my sales to OSS?
No, only cross-border B2C sales are included in the OSS report.
Is there anything else I need to report except OSS returns?
Yes, domestic sales still need to be reported via standard VAT returns in the respective countries.
How to register for OSS?
Registration involves accessing the BZSt portal and submitting the necessary data by the established deadlines.
Do I need a special report for OSS?
Yes, the OSS report must include details of all B2C cross-border sales from all dispatching countries.
Can non-EU businesses use OSS reporting as well?
Yes, non-EU businesses can choose an EU country to register for OSS, provided they have a standard VAT registration there.
Navigating OSS regulations may seem daunting initially, but with careful planning and the right support, it can significantly simplify your VAT reporting processes across Europe.
