Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- Key Benefits of the OSS
- Registration for OSS
- What is Not Included in OSS?
- Changes for EU-Based Sellers
- Changes for Non-EU Sellers
- Submission of OSS Returns
- Key Steps for Submission
- Conclusion
- FAQ
Introduction
As of July 1, 2021, the European Union introduced a significant shift in the VAT landscape for e-commerce through the One Stop Shop (OSS) regulation. This change promises to simplify VAT compliance but also demands a thorough understanding due to the complexities involved. For online sellers, both within and outside the EU, these adjustments are pivotal in ensuring seamless transitions and continued compliance. This blog post will guide you through the specifics of the OSS, highlighting its benefits, registration process, exclusions, and implications for various types of sellers.
What is the One Stop Shop (OSS)?
The OSS is an extension of the Mini One Stop Shop (MOSS), which was initially designed for telecommunications, broadcasting, and electronic services. From July 2021, the OSS has expanded to cover all business-to-consumer (B2C) services within the EU and certain supplies facilitated by electronic interfaces. Additionally, the Import One Stop Shop (IOSS) has been introduced for low-value goods imported from outside the EU.
Key Benefits of the OSS
The OSS aims to streamline the European VAT return process for businesses, offering several advantages:
- Simplified VAT Returns: Companies can now file a single VAT return for all their EU sales, reducing the need to register in each member state where they have customers.
- Reduced Administrative Burden: Instead of dealing with multiple tax authorities, businesses can interact with the tax office in their home country.
- Cost Efficiency: The consolidation of VAT reporting can lead to significant time and cost savings.
Registration for OSS
To benefit from the OSS, sellers must register via the Federal Central Tax Office (BZSt) or the relevant local tax authority. The registration process includes:
- Accessing the BZSt Portal: Log in using a certificate file; if you don't have an account, set one up as soon as possible to avoid delays.
- Filling Out Forms: Complete the "Registration notice for participation in the OSS EU regulation" form. Ensure accuracy and consult a tax advisor if needed.
- Confirmation: Upon submitting the form, you will receive a confirmation and further information on declaration periods and payment deadlines.
What is Not Included in OSS?
Certain transactions are excluded from OSS, requiring separate VAT reporting:
- Domestic Sales: Sales made within the same country where the goods are stored are not covered by OSS.
- Imports and Purchases: These need to be reported traditionally.
- B2B Sales: Business-to-business transactions are also excluded.
Changes for EU-Based Sellers
For EU-based companies, the OSS brings about notable changes:
- Abolition of Distance Sales Thresholds: Except for a single EU-wide threshold of €10,000.
- VAT Registration Requirements: Companies storing goods in multiple EU countries must still register for VAT in each country.
Example Scenarios
Alpha Services - Single Storage Location
- Stores goods in Germany and sells to France, Italy, and Spain.
- Only requires a home VAT number in Germany, with cross-border sales reported through OSS.
Beta Products - Multiple Storage Locations
- Stores goods in Germany, France, Italy, and Spain.
- Requires VAT registration in all four countries.
Changes for Non-EU Sellers
For non-EU online sellers, the removal of distance sales thresholds simplifies VAT reporting but comes with specific requirements:
- Export Classification: Goods shipped from outside the EU to EU customers are classed as exports, with the end customers responsible for customs duties and taxes.
- VAT Registration: Necessary in each country where goods are stored.
Example Scenarios
Delta Limited - Selling Through Amazon UK
- UK-based company storing goods in the UK and selling to Italy, France, and Spain.
- Requires a VAT number in the UK, with OSS during order fulfillment by Amazon.
Gamma Ltd - Direct Sales Without a Deemed Supplier
- UK-based company selling directly to Italy, France, and Spain without using platforms like Amazon.
- Goods shipped from the UK are treated as exports, with customers handling customs duties.
Submission of OSS Returns
Initially, OSS forms for Q3 2021 cannot be submitted digitally but must be filled out manually. Here’s what you need:
- Data Preparation: Sales should be sorted by type, storage/delivery country, and VAT rates.
- Separate Foreign from Domestic Sales: Ensure clear differentiation, especially if using multiple warehouses.
- Detailed Sorting: Transactions must be categorized by EU country and respective VAT rates.
Key Steps for Submission
- Identify Services vs. Product Sales: Separate these in your OSS return.
- Foreign and Domestic Sales: Clearly segregate these transactions.
- EU Country Sales and VAT Rates: Declare transactions based on applicable VAT rates per country.
Conclusion
Understanding and adapting to the OSS changes is essential for online sellers to ensure VAT compliance and efficient business operations in the EU. By leveraging the benefits of simplified VAT returns and staying informed about the registration processes and reporting requirements, businesses can navigate the complexities of this new system.
FAQ
Do I need more than one registration after OSS? Yes, you need VAT numbers in your home country in the EU or your nominated EU country if you are a non-EU business. Additionally, VAT registration is required in all countries where you store goods.
Will I need to report all my sales in the OSS report? No, only cross-border B2C sales need to be reported in the OSS return.
How to register for OSS? Register via the OSS website of the Federal Central Tax Office (BZSt) or relevant local tax authority. The registration should be completed by the end of a quarter to be applicable from the next quarter.
Is OSS reporting mandatory? No, but it is recommended to minimize administrative costs. Businesses can continue with standard reporting, which may require registration in all EU states where sales occur.
Can non-EU businesses use OSS? Yes, non-EU businesses can choose any EU country to register for OSS, provided they have a standard VAT registration in that country.
Are expenses or imports included in OSS reports? No, OSS is only for cross-border B2C sales, not for expenses or imports.
By ensuring compliance with these revised VAT regulations, online sellers can ease their administrative burden and focus on growing their business within the EU market.
