One Stop Shop – Changes for Online Sellers

Table of Contents

  1. Introduction
  2. What is the One Stop Shop (OSS)?
  3. How to Register for OSS
  4. Scenarios for OSS Applicability
  5. OSS Exclusions and Special Cases
  6. Practical Implications and Real-Life Examples
  7. How to Submit OSS Returns
  8. Conclusion
  9. Frequently Asked Questions (FAQ)

Introduction

In the ever-evolving landscape of e-commerce, staying compliant with tax regulations is crucial for businesses that want to thrive without facing legal repercussions. The EU's introduction of the One Stop Shop (OSS) scheme is a significant shift aimed at simplifying VAT compliance for online sellers. Launched in July 2021, the OSS replaces previous systems and brings several changes that both EU and non-EU businesses must navigate. This blog post will deeply explore the OSS regulation, its benefits, registration process, and implications on online sellers.

What is the One Stop Shop (OSS)?

The OSS is an extension of the Mini One Stop Shop (MOSS), which was previously limited to telecommunications, broadcasting, and electronic (TBE) services. The new OSS scheme expands its coverage to include all business-to-consumer (B2C) services and distance sales of goods within the EU. Additionally, it introduces the Import One Stop Shop (IOSS) for declaring and paying VAT on low-value goods imported into the EU.

Key Benefits of OSS

While the transition might seem daunting initially, OSS offers several long-term advantages:

  1. Simplified VAT Reporting: Businesses selling to multiple EU countries without physical storage there can now fulfil their VAT obligations using a single OSS VAT return in addition to their home VAT return.
  2. Unified Threshold: Elimination of individual country thresholds for distance sales, replaced by a single EU-wide threshold of €10,000.
  3. Centralized Payment: One payment per period for both home and OSS returns simplifies the financial aspect of compliance.

How to Register for OSS

To leverage the benefits of OSS, timely registration is essential. Here's a step-by-step guide:

Step-by-Step Registration Process

  1. Login to the BZSt Online Portal: Visit the Federal Central Tax Office’s (BZSt) website and navigate to the OSS registration section.
  2. Certificate File Login: Use your existing access data or create a new user account, which may take additional time.
  3. Fill Out Registration Notice: Complete the “Registration notice for participation in the OSS EU regulation” form under “Forms and Services”.
  4. Submit and Confirm: Submit the form and wait for BZSt’s written confirmation of your OSS registration.

It's advisable to seek assistance from a tax advisor to ensure accuracy and completeness in the registration process.

Scenarios for OSS Applicability

EU-Based Sellers

  1. Single Country Storage: Companies like Alpha Services, which store goods only in one country (e.g., Germany), do not need to register for VAT in other EU countries they sell to. OSS simplifies their VAT obligations by consolidating them into a single return.

  2. Multiple Countries Storage: Firms like Beta Products, which store goods in multiple EU countries, must still register for VAT in each country where storage occurs. OSS aids in reporting sales to other countries, but domestic transactions require separate standard VAT returns.

Non-EU Sellers

  1. Selling Via a Deemed Supplier: Delta Limited, a non-EU business selling through platforms like Amazon UK, must navigate complex VAT landscapes. They need a UK VAT number and must ensure compliance with OSS rules for cross-border sales.

  2. Direct Selling Without a Deemed Supplier: Gamma Ltd, another non-EU company, sells directly through their website, shipping from the UK to several EU countries. They must manage VAT and customs for each end consumer.

OSS Exclusions and Special Cases

While OSS covers a broad spectrum of transactions, some remain outside its scope:

  1. Domestic Sales: These still require standard VAT returns in respective countries.
  2. Imports, Purchases, and B2B Sales: Continue to be reported through traditional VAT return methods.
  3. Specific Transactions: Certain complex transactions necessitate separate reporting outside the OSS.

Practical Implications and Real-Life Examples

Example 1: Alpha Services (Single Country Storage)

Alpha Services is well-positioned to benefit from OSS. They need only a German VAT registration for their home country and can avoid multiple VAT registrations in the countries they sell to. OSS simplifies their VAT reporting significantly, reducing administrative burdens.

Example 2: Beta Products (Multiple Country Storage)

Beta Products faces more complex requirements. Despite the simplicity OSS offers for distance sales, Beta Products must still maintain VAT registrations in Germany, France, Italy, and Spain due to their storage practices.

Example 3: Zeta Ltd (Deemed Supplier Scenario)

Zeta Ltd utilizes Amazon UK for distribution, requiring a UK VAT number and compliance with OSS for cross-border EU sales. This setup leverages Amazon's status as a deemed supplier to manage VAT on behalf of Zeta Ltd, simplifying their compliance task.

How to Submit OSS Returns

Currently, OSS returns require manual submission through the “My BOP” portal of the BZSt. Although a more automated digital process is anticipated, businesses must manually fill out forms and categorize transactions by country, product type, and applicable VAT rates.

Data Requirements for OSS Submission

  1. Services vs. Product Sales: Segregate chargeable services from product sales.
  2. Foreign vs. Domestic Sales: Differentiate sales to German end-customers from those to other EU countries.
  3. Sales Sorting: Sort sales by country and VAT rates, ensuring accurate classification and reporting.

Conclusion

The One Stop Shop is a transformative regulation designed to streamline VAT compliance for online sellers. While its implementation poses initial challenges, the long-term benefits of reduced administrative burden and simplified reporting are undeniable. Through OSS, both EU and non-EU businesses can better manage their VAT obligations, fostering a more efficient and cohesive e-commerce environment within the EU.

For those feeling overwhelmed by the intricacies of the OSS process, consulting a specialized tax advisor can be invaluable. Companies like hellotax offer tailored assistance, helping businesses navigate the new landscape with ease and ensuring compliance with all relevant regulations.

Frequently Asked Questions (FAQ)

Do I need more than one registration after OSS?

Yes, you need VAT numbers in your home country and all EU countries where you store goods.

Will I need to report all my sales to OSS?

No, only cross-border B2C (Business to Consumer) sales need to be included in the OSS report.

How to register for OSS?

Registration is straightforward through the BZSt online portal. Ensure you complete the registration by the end of a quarter to use OSS in the following quarter.

Can non-EU businesses use OSS reporting?

Yes, non-EU businesses can choose a country for OSS registration, provided they have a standard VAT registration in that country.

Are B2B transactions reported in OSS?

No, B2B transactions are reported via traditional VAT return methods. Only cross-border B2C sales are included in OSS.

Understanding and adapting to the new OSS regulation is crucial for any business involved in EU e-commerce. By staying informed and proactive, businesses can turn regulatory compliance from a challenge into a streamlined part of their operations.