Table of Contents
- Introduction
- What is OSS (One Stop Shop)?
- Key Benefits of OSS
- Registration for OSS
- Exclusions from OSS
- Changes for EU-Based Online Sellers
- Changes for Non-EU Online Sellers
- How to Submit OSS Applications
- Conclusion
- Frequently Asked Questions (FAQ)
Introduction
Online selling has transformed commerce, crossing borders effortlessly and tapping into global markets. However, this expansion brings a complex web of tax regulations. The European Union has introduced the One Stop Shop (OSS) regulation to streamline VAT reporting for e-commerce businesses. This blog post dissects the OSS, elucidates its benefits, navigates the changes for both EU and non-EU sellers, and guides on how to register and comply effectively.
What is OSS (One Stop Shop)?
Prior to July 2021, the Mini One Stop Shop (MOSS) was an electronic system for service providers who supplied telecommunications, broadcasting, and electronic (TBE) services. MOSS allowed these suppliers to declare and pay VAT due across all EU Member States via one Member State.
From July 1, 2021, the scope of MOSS expanded to cover all business-to-consumer (B2C) services across the EU, transforming into the OSS. The OSS now includes all distance sales of goods within the EU and certain domestic supplies facilitated by electronic interfaces under specific conditions. Additionally, the Import One Stop Shop (IOSS) was introduced for distance sales of low-value goods imported from outside the EU.
Key Benefits of OSS
The OSS aims to simplify VAT compliance for e-commerce businesses by allowing them to declare and pay VAT for sales across multiple EU countries via a single VAT return in their home country. Here are the primary benefits:
- Reduced Administrative Burden: Businesses no longer need to register for VAT in each EU country where their consumers are located unless they store goods there.
- Simplified VAT Returns: Only one VAT return needs to be filed for all cross-border sales within the EU.
- Unified VAT Regulation: The elimination of individual country delivery thresholds reduces complexity for businesses.
Registration for OSS
To utilize the OSS, businesses must register via the OSS website of the Federal Central Tax Office (BZSt). Registration must be completed by the end of a quarter to use OSS in the following quarter. For example, to use OSS from Q4, registration must be completed by the end of Q3.
Steps for Registration:
- Access the BZSt Online Portal: Log in using a certificate file.
- Fill out Registration Form: Complete the “Registration notice for participation in the OSS EU regulation” under "Forms and Services."
- Submit the Form: The application will be reviewed and confirmed in writing by the BZSt.
- Contact a Tax Advisor: For any ambiguities, consulting a tax advisor is highly recommended.
Exclusions from OSS
Certain transactions are not included in OSS and require separate reporting:
- Domestic Sales: These must be reported via standard VAT returns in the country where the sale occurs.
- Imports and Purchases: These transactions must be reported via the standard VAT return method.
- Business-to-Business (B2B) Sales: These do not qualify for OSS and require traditional VAT reporting.
Changes for EU-Based Online Sellers
For EU-based sellers, the OSS abolishes the previous distance sales thresholds. Now, businesses no longer need separate VAT registrations in each EU country they sell to unless they store goods there.
Scenarios for EU Companies:
Example 1: Alpha Services
- Background: Stores goods in Germany and sells to France, Italy, and Spain.
- Implication: With OSS, Alpha Services only needs the German VAT registration.
Example 2: Beta Products
- Background: Stores goods in Germany, France, Italy, and Spain.
- Implication: Requires VAT registrations in all four countries due to storage.
Changes for Non-EU Online Sellers
Non-EU sellers also benefit from the elimination of individual country thresholds for distance sales. However, customs duties apply when goods are imported into the EU.
Scenarios for Non-EU Companies:
Example 1: Delta Limited
- Background: Sells via Amazon UK and has customers in Italy, France, and Spain.
- Implication: Requires UK VAT registration and reports sales from Amazon UK.
Example 2: Zeta Limited
- Background: Stores goods in Germany, France, Italy, and Spain with sales facilitated by Amazon.
- Implication: Requires VAT registrations in all these countries.
Example 3: Gamma Ltd
- Background: UK-based seller without a deemed supplier, serving Italy, France, and Spain through its website.
- Implication: Requires UK VAT registration only.
How to Submit OSS Applications
Currently, OSS applications must be submitted manually via the BZSt portal. E-commerce sellers need to prepare a detailed data structure to facilitate the declaration process.
Steps for Submission:
- Identify Chargeable Services vs. Product Sales: Separate declarations for services and products are necessary.
- Differentiate Between Domestic and Foreign Sales: Separate sales to domestic and other EU countries.
- Sort Sales by EU Country and VAT Rates: Ensure detailed sorting by VAT rates and product types.
A tax advisor can simplify this process, helping you navigate the complexities of OSS pre-registration and ongoing compliance.
Conclusion
The OSS presents significant changes for e-commerce businesses, aiming to simplify VAT compliance across the EU. While the initial registration and compliance process might seem daunting, the long-term benefits in reducing administrative burdens are substantial. For tailored assistance and automation in VAT compliance, consulting a specialized tax advisor such as hellotax can be highly beneficial.
Frequently Asked Questions (FAQ)
Do I need more than one registration after OSS?
You need VAT numbers in your home country or nominated country within the EU and 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.
Is there anything else I need to report besides the OSS return?
Yes, domestic sales should be reported via standard VAT returns in the respective countries.
How to register for OSS?
Registration can be done via the BZSt portal, with assistance from tax advisors like hellotax for countries such as Italy, France, Poland, Czech Republic, Germany, Spain, the Netherlands, Sweden, and Ireland.
Can non-EU businesses use OSS reporting?
Yes, non-EU businesses can choose an EU country for OSS registration, provided they have a standard VAT registration in that country.
For further assistance and streamlined compliance with the OSS regulation, contact a professional tax service provider like hellotax.
