Introduction

Navigating the complex landscape of VAT compliance within the European Union has often been a daunting task for online sellers. However, with the introduction of the One Stop Shop (OSS) from July 2021, a significant transformation in the VAT system aims to streamline these processes. But what exactly does this change entail? How will it affect your e-commerce business? Keep reading to discover everything you need to know about the OSS and its impact.

What is the One Stop Shop (OSS)?

The OSS is an extension of the previously implemented Mini One Stop Shop (MOSS). Initially, MOSS allowed providers of telecommunications, broadcasting, and electronic (TBE) services to declare and pay VAT due in multiple EU Member States via a single return in just one of those countries. From July 1, 2021, this scheme has been expanded to cover all B2C services and distance sales of goods within the EU, as well as certain domestic supplies facilitated through electronic interfaces.

Key Benefits of the OSS

The primary objective behind the OSS is to simplify VAT compliances for businesses. Here are its main advantages:

Consolidated Reporting: Businesses can now submit a single VAT return for multiple countries, saving time and reducing administrative burdens.
Elimination of Multiple VAT Registrations: EU online sellers no longer need to acquire VAT numbers in each country they sell to but do not store goods in.
Reduced Complexity: The abolition of individual distance sales thresholds simplifies VAT obligations and removes the necessity for country-specific thresholds within the EU.

Registration Process for OSS

Steps to Register

Timing: Sellers needed to register by June 30, 2021, for the scheme starting in the third quarter of the year. Registrations for Q4 or beyond must be completed by the end of the preceding quarter.
Portal Access: Use the Federal Central Tax Office's (BZSt) online portal, BOP, for registration.
Submission: Fill out the “Registration notice for participation in the OSS EU regulation” and submit. Confirmations will be issued by BZSt in writing.

Tips for Successful Registration

Timely Preparation: Given potential delays in setting up a user account on the BOP portal, early registration is advisable.
Consult with Advisors: If there are any ambiguities or complexities, it’s highly recommended to contact tax advisors.

How OSS Changes Affect Online Sellers

EU-based Sellers

For EU companies, the significant change is the removal of the old distance sales thresholds. Now, a single EU-wide threshold of €10,000 applies, reducing the need for multiple VAT registrations for companies that do not store goods in other countries.

Example Scenario:

Single Storage: A company storing all goods in Germany but selling across France, Italy, and Spain will only require a German VAT number and an OSS return.
Multiple Storages: Companies storing in multiple countries still need VAT registrations in each country where storage happens.

Non-EU Sellers

Non-EU online sellers also experience simplifications, but they must still register for VAT in every country where they store goods. Here are common scenarios:

Sales Through Deemed Suppliers: Non-EU sellers using platforms like Amazon, where the platform acts as a deemed supplier, must still follow specific VAT rules.
Direct Sales: Non-EU companies directly selling to EU consumers must manage VAT registrations based on where goods are stored.

Example Scenario for Non-EU Sellers:

Amazon UK Seller: A non-EU seller on Amazon UK with customers across Italy, France, and Spain can use the OSS scheme while still needing VAT registrations where storage happens.

What OSS Does Not Cover

While OSS covers many VAT filing needs, some transactions are still outside its scope:

Domestic Sales: These must still be reported through the standard VAT return in the applicable country.
Non-EU Imports and Purchases: Such transactions need to be reported through traditional VAT returns.
Business-to-Business (B2B) Transactions: B2B sales are excluded and require standard reporting methods.

Practical Guide to Submitting OSS Returns

Manual Submission for Q3 2021

The first OSS returns in Q3 2021 cannot be submitted digitally, necessitating manual entry into the BZSt portal.

Preparing Your Data

Service vs. Product Sales: Categorize and list these separately due to differing VAT treatments.
Sort Sales by Country: Separate sales to German and overseas EU customers and sort them by the warehouse location and applicable VAT rates.

Conclusion

The introduction of the One Stop Shop (OSS) within the EU marks a significant stride towards simplifying VAT compliance for online sellers. By consolidating the reporting process and reducing the need for multiple VAT registrations, OSS aims to make cross-border e-commerce more efficient and less cumbersome. However, understanding the finer details and correctly navigating the registration and reporting processes are critical for maximizing the benefits of this new system. Engage with a tax advisor to ensure you meet all requirements and take full advantage of the OSS scheme.

FAQ Section

Do I need more than one registration after OSS?

Yes, you still need VAT numbers in your home country and for every EU country where you store goods.

Will I need to report all my sales to the OSS report?

No, only cross-border B2C sales need to be reported in the OSS.

Is OSS a mandatory report?

No, you can opt to remain with standard reporting, though OSS is recommended to minimize administrative efforts.

Can non-EU businesses use OSS?

Yes, but the company must have a standard VAT registration in one of the EU countries and can use OSS from there.

Can I include expenses/imports in the OSS report?

No, OSS is exclusively for cross-border B2C sales.

For more personalized assistance with OSS and VAT compliance, consult with a tax advisor to ensure compliance and streamline your business operations.

One Stop Shop – Changes for Online Sellers

Table of Contents

Introduction

What is the One Stop Shop (OSS)?

Key Benefits of the OSS