Table of Contents
- Introduction
- What is the One Stop Shop (OSS)?
- How to Register for OSS?
- What is Not Included in OSS?
- Changes for Non-EU Online Sellers
- Submitting OSS Returns
- Simplifying OSS Compliance
- Conclusion
- Frequently Asked Questions (FAQs)
Introduction
Have you ever pondered how the European Union's Value Added Tax (VAT) challenges impact online sellers? The EU's recent VAT reform introduces the One Stop Shop (OSS) regulation, designed to streamline the VAT process for e-commerce transactions across Europe. This blog post will delve into the significant changes brought by the OSS, its implications for online sellers, and the steps to register and comply with the new system. By the end, you'll grasp how OSS transforms the landscape for businesses engaged in cross-border sales within the EU.
What is the One Stop Shop (OSS)?
Background of OSS
Before OSS, the Mini One Stop Shop (MOSS) served as a mechanism for service providers in telecommunications, broadcasting, and electronic services (TBE) to declare and pay VAT across EU Member States through a single Member State. However, the OSS, effective from July 1, 2021, expands this system to include all business-to-consumer (B2C) services and distances sales of goods within the EU, as well as specific domestic supplies of goods facilitated by electronic interfaces. Additionally, the Import One Stop Shop (IOSS) was introduced for VAT declaration on the import of low-value goods from outside the EU.
Key Benefits of OSS
The OSS aims to significantly simplify the VAT filing system for businesses. By allowing companies to file a unified VAT return, businesses benefit from a reduced administrative burden. Instead of navigating numerous VAT registrations across multiple EU states, sellers can streamline their compliance with fewer bureaucratic hurdles. However, the transition phase might seem challenging as both tax offices and businesses adapt to the new system.
How to Register for OSS?
Registration Process
To leverage the OSS, sellers needed to register by specific deadlines based on their desired start dates. Registration is conducted through the Federal Central Tax Office (BZSt) portal, requiring a certificate file for login. Since many sellers already possess access data due to other tax obligations, the process is straightforward for them.
Required Steps
- Log into the BZSt portal: Access the "Forms and Services" section to find the "Registration notice for participation in the OSS EU regulation."
- Submit the form: After entering the necessary data, submit the form to obtain written confirmation from the BZSt.
- Consult a tax advisor: If any uncertainties arise, consulting a tax advisor is recommended to ensure accuracy in data entry.
Registration Tips
Early registration is crucial to avoid delays. Inconsistent data or missing certificates may hinder the process, so sellers should prepare their documents well in advance.
What is Not Included in OSS?
Exclusions
Despite its comprehensive coverage, several transactions remain outside the scope of OSS:
- Domestic Sales: Must still be reported via standard VAT returns in their respective countries.
- Business-to-Business (B2B) Transactions: Excluded from OSS reporting and require standard VAT returns.
- Imports and Purchases: These also necessitate separate reporting.
Detailed Scenarios
To better understand these exclusions, consider the following scenarios:
Example 1 – Alpha Services Only Stores in Germany
Alpha Services, a German-based company, sells to consumers in France, Italy, and Spain but only stores goods in Germany. Under OSS, they remain free from registering VAT in the other countries, simplifying their VAT filing process significantly.
Example 2 – Beta Products Stores in Four EU Countries
Beta Products, also based in Germany but storing goods in four countries, must register for VAT in all those locations. This complexity underscores the need for a coherent system like OSS to manage cross-border sales efficiently.
Changes for Non-EU Online Sellers
Abolishing Distance Sale Thresholds
The abolition of individual distance sales thresholds for non-EU sellers marks a significant shift. This change means non-EU sellers must now adhere to new guidelines when selling to EU consumers.
Example Scenarios for Non-EU Sellers
Example 1 – Delta Limited: Selling on Amazon UK
Delta Limited, a non-EU company using Amazon UK, sells to customers in multiple EU countries. Amazon acts as a deemed supplier, requiring Delta Limited to maintain a VAT number in the UK and adhere to specific VAT registration norms.
Example 2 – Zeta Limited: Selling from the UK and Storing Across Multiple Countries
With storage in France, Italy, Spain, and the UK, Zeta Limited must maintain VAT registrations across these countries. This scenario demonstrates OSS's potential to streamline compliance for multi-location sellers.
Submitting OSS Returns
The Process
In the third quarter of 2021, the OSS returns could not be submitted digitally. Sellers had to manually input data into the BZSt portal, indicating a transitional period where technical infrastructure catches up with regulatory requirements.
Key Considerations
- Separate services and product sales: Distinct reporting for digital and physical goods.
- Distinguish foreign from domestic sales: Important for companies using different EU warehouses.
- Sort sales by country and VAT rate: Essential to ensure compliance and accuracy.
Simplifying OSS Compliance
Assistance from Tax Advisors
Given the complexity, sellers are encouraged to seek assistance from specialized tax advisors, such as hellotax, who can facilitate not only registration but also automate transaction separation and data management, making compliance manageable.
Conclusion
The OSS regulation represents a pivotal shift in the EU's approach to VAT compliance for e-commerce businesses. By consolidating VAT reporting into a single system, the OSS reduces administrative overhead, although this transition phase might present some initial hurdles. Whether you are an EU-based seller or a non-EU company, understanding and adapting to the OSS framework is crucial for seamless operations and compliance.
Frequently Asked Questions (FAQs)
Do I need more than one registration after OSS?
Yes, you must register for VAT numbers in the EU countries where you store goods.
Will I need to report all my sales to OSS?
No, only cross-border B2C sales are reported to OSS.
Is there anything else I need to report except for OSS returns?
Yes, domestic sales must be reported via standard VAT returns in their respective countries.
How to register for OSS?
Registration is straightforward but must be done by specific deadlines, and assistance from services like hellotax can streamline the process.
Do I need a special report for OSS?
Yes, the report must align with the OSS structure, covering all B2C cross-border sales.
Who can file my OSS report?
Authorized personnel or licensed tax advisors can file OSS reports, and services like hellotax offer this support across various countries.
Can I deregister my VAT ID in the countries where I do not store?
Yes, post-OSS registration, you can deregister VAT IDs for countries where you do not store goods.
Is OSS a mandatory report?
No, standard reporting can still be used, but OSS minimizes administrative costs.
Can non-EU businesses use OSS?
Yes, non-EU businesses can register for OSS in any chosen EU country where they have standard VAT registration.
Can I include my expenses/imports in the OSS report?
No, OSS is exclusively for B2C cross-border sales.
Do B2B transactions need to be reported in OSS?
No, B2B transactions are reported via the standard method.
Do I still need to file EC reports and PL SAF-T reports?
Yes, B2B cross-border transactions must still be reported through traditional methods.
How can I submit the OSS return?
As of Q3 2021, manual entry is required, but future updates might enable digital submissions.
Navigating the OSS regulation can be daunting but understanding its framework and seeking professional help ensures compliance and operational efficiency in the evolving e-commerce landscape.
