One Stop Shop – Changes for Online Sellers

Table of Contents

  1. Introduction
  2. Understanding the One Stop Shop (OSS)
  3. Benefits of Implementing OSS
  4. How to Register for OSS
  5. What OSS Does Not Cover
  6. Changes for EU-Based Online Sellers
  7. Changes for Non-EU Online Sellers
  8. Practical Scenarios
  9. OSS Application Submission Challenges
  10. Conclusion
  11. FAQs (One Stop Shop)

Introduction

Navigating the labyrinth of tax regulations can be a daunting task for online sellers operating across the European Union. Imagine a system that simplifies this complication, easing the burdens of VAT registration and reporting across multiple EU countries. Enter the One Stop Shop (OSS) — a revolutionary change in the EU VAT regime that promises just that. Since its implementation in July 2021, the OSS system has introduced a more streamlined process for handling VAT for cross-border sales, replacing the fragmented national VAT thresholds with a unified EU-wide approach. This blog post aims to provide an in-depth look at how the OSS works, its benefits, the registration process, and its implications for both EU and non-EU sellers.

Understanding the One Stop Shop (OSS)

The OSS is a monumental step forward in the EU VAT reform for e-commerce. Prior to the One Stop Shop, online sellers had to register and file VAT returns in each EU country where they exceeded specific sales thresholds. This was a cumbersome and expensive process, particularly for small and medium-sized enterprises.

The Transition from MOSS to OSS

Before OSS, the Mini One Stop Shop (MOSS) was available exclusively for telecommunications, broadcasting and electronic (TBE) services. Starting July 1, 2021, the OSS regime expanded these benefits to a broader array of goods and services. This change means that almost all B2C (business-to-consumer) transactions within EU Member States, where the supplier is not based, can now be reported through a single VAT return.

Comprehensive Coverage

OSS not only applies to distance sales of goods within the EU but also includes certain domestic supplies of goods facilitated by electronic interfaces. Additionally, the Import One Stop Shop (IOSS) was introduced for declaring and paying VAT on low-value goods (those under €150) imported from outside the EU.

Benefits of Implementing OSS

The OSS system brings numerous advantages, aiming to reduce administrative burdens and streamline compliance for online sellers.

Simplified VAT Returns

For businesses with activities in multiple EU countries, OSS allows them to file a single VAT return in their home country rather than multiple VAT registrations and filings. This consolidation reduces administrative effort and lowers compliance costs.

Unified Threshold

Previously, different EU countries had separate distance sales thresholds, requiring multiple VAT registrations when these were exceeded. With the OSS, there is now a single €10,000 threshold for all cross-border sales across the EU, further simplifying the tax landscape for businesses.

E-commerce Facilitation

By reducing the bureaucratic hassle, the OSS makes it easier for smaller businesses to engage in cross-border e-commerce, promoting competition and driving economic growth across the region.

How to Register for OSS

Registering for OSS involves several steps and requires attention to deadlines to ensure seamless integration into the new system.

Initial Registration Steps

  1. Sign-Up: To start using OSS from a given quarter, businesses must register by the end of the previous quarter. For example, to start using OSS from Q3 (July 1), registration must be completed by June 30.

  2. Online Portal Access: Registration is done via the Federal Central Tax Office (BZSt) online portal. Businesses may need access data, typically involving a certificate file for login.

  3. Data Entry and Submission: Under “Forms and Services,” find the “Registration notice for participation in the OSS EU regulation” form. After entering necessary data, submit the form. Approval will be communicated in writing along with relevant details on declaration periods and payment deadlines.

Common Registration Queries

For businesses unsure about whether OSS is right for them or facing challenges in the registration process, consulting a tax advisor specializing in e-commerce VAT can be invaluable. Firms like hellotax offer assistance across various countries, enhancing the registration process's efficiency and accuracy.

What OSS Does Not Cover

Despite its comprehensive coverage, certain transactions remain outside the OSS system and must be reported separately.

Excluded Transactions

  1. Domestic Sales: These are not reported via OSS but must be submitted through standard VAT returns in the respective countries.
  2. Imports and B2B Sales: Similarly, imports, purchases, and business-to-business (B2B) transactions require standard VAT returns.
  3. Multiple Storage Locations: For businesses storing goods in multiple EU countries, separate VAT registrations in each nation remain necessary.

Changes for EU-Based Online Sellers

Abolished Distance Sales Thresholds

The new OSS system eliminates the previous national distance sales thresholds, replacing them with a single EU-wide threshold of €10,000. This helps businesses avoid multiple VAT registrations unless storing goods in several EU countries. Companies with central storage in one EU country can now handle VAT more seamlessly.

Practical Impact

Consider Alpha Services, a Germany-based company storing goods in Germany but selling to France, Italy, and Spain. Under OSS, Alpha Services only requires a home VAT registration for Germany, avoiding additional VAT registrations in the other selling countries.

In contrast, Beta Products, which stores goods in Germany, France, Italy, and Spain, still needs VAT registrations in all these countries and must file separate VAT returns in each due to the physical storage locations.

Changes for Non-EU Online Sellers

Import Procedures and VAT Registrations

Non-EU sellers follow a similar principle: if they do not store goods in the EU, the OSS simplifies their VAT obligations significantly. If they do store goods in multiple EU countries, however, they must still register for VAT in each storage location.

  1. Deemed Supplier: Sellers using platforms like Amazon or eBay, termed "deemed suppliers," may have their VAT obligations simplified as the platform handles some VAT aspects.

  2. Direct Sellers: Non-EU sellers without deemed suppliers must handle their imports and comply with relevant VAT registrations and reporting requirements.

Practical Scenarios

Non-EU Seller via Deemed Supplier

Take Delta Limited, a non-EU company selling on Amazon UK but targeting EU consumers. Here, Amazon acts as the deemed supplier, simplifying VAT obligations for Delta Limited, albeit requiring a UK VAT registration.

Non-EU Direct Sellers

Gamma Ltd, another non-EU company, directly sells to the EU without a deemed supplier and stores goods only in the UK. Selling to Italy, France, and Spain from the UK makes Gamma’s sales exports, requiring end customers to manage import duties and VAT.

OSS Application Submission Challenges

Manual Submissions in Early Phases

Initially, OSS forms must be manually submitted via the Federal Central Tax Office's portal as digital functionality is still under development. This involves manually sorting sales data as per required fields.

Data Requirements and Organization

Successful submissions demand meticulous preparation, ensuring data is organized by product type, storage location, end customer country, and VAT rates. Separate declarations for services and products also apply.

Addressing Data Sorting Complexity

Especially for those using Fulfilled by Amazon (FBA) services, sorting sales by warehouse location is critical. Tax advisors specializing in e-commerce can offer significant support in navigating these complexities.

Conclusion

Implementing the OSS heralds a new era for VAT compliance within the EU, aiming to simplify and unify tax obligations for cross-border e-commerce. By reducing administrative burdens and streamlining processes, OSS permits businesses to focus on growth and expansion, rather than grappling with complex tax regulations. For both EU and non-EU sellers, understanding OSS’s benefits and requirements is essential for optimizing operations and maintaining compliance.

FAQs (One Stop Shop)

  • Do I need more than one registration after OSS? Yes, VAT numbers are required in your home country and for any EU country where you store goods.

  • Will I need to report all my sales to OSS? No, only cross-border B2C sales need to be reported.

  • Is there anything else I need to report except OSS return? Domestic sales still require standard VAT returns.

  • How to register to OSS? Registration can be done via the Federal Central Tax Office (BZSt) portal, with a deadline each quarter.

  • Can non-EU businesses use OSS reporting? Yes, as long as the non-EU business is registered for VAT in any EU country.

  • Can I include my expenses/imports in the OSS report? No, OSS is only for B2C cross-border sales.

  • Do I need to file EC reports & PL SAF-T reports? Yes, for B2B transactions not covered by OSS.

Understanding and complying with the new VAT regulations can be challenging initially, but the long-term benefits of OSS make it a worthwhile endeavor. For specialized assistance, companies like hellotax offer tailored solutions to ease the transition and ensure full compliance.