One Stop Shop – Navigating Changes for Online Sellers

Table of Contents

  1. Introduction
  2. Understanding the One Stop Shop (OSS)
  3. Benefits and Implications of OSS
  4. Registration Process for OSS
  5. What Transactions Are Excluded from OSS?
  6. Impact on EU and Non-EU Online Sellers
  7. Detailed Reporting Process Under OSS
  8. Conclusion: Embracing OSS for Efficient VAT Compliance
  9. FAQ

Introduction

The e-commerce landscape within the European Union underwent a significant transformation with the introduction of the One Stop Shop (OSS) from July 2021. Prior to this change, online sellers had to navigate various VAT registration requirements and thresholds across different EU countries, leading to administrative burdens and complexities. But what exactly is OSS, and how does it affect online sellers within and outside the EU? In this comprehensive guide, we will delve into the specifics of the OSS regulation, its advantages, the changes it brings, and practical steps for registration and compliance.

Understanding the One Stop Shop (OSS)

The OSS is an extension of the previous Mini One Stop Shop (MOSS) system, initially set up to simplify VAT declarations for telecommunications, broadcasting, and electronic (TBE) services. From July 2021, OSS now encompasses all B2C services, distance sales of goods within the EU, and certain domestic supplies facilitated by electronic interfaces. Additionally, the Import One Stop Shop (IOSS) was introduced to handle VAT on low-value goods imported from outside the EU.

Key Changes Introduced by OSS

  • Abolishment of Distance Sales Thresholds: No more individual thresholds across EU countries; an EU-wide €10,000 limit applies for companies with single-country storage.
  • Simplified VAT Reporting: Companies can now submit a single OSS VAT return alongside their home VAT return per period.
  • Extended Scope: Applies to all distance sales of goods and some domestic supplies facilitated by electronic interfaces.

Benefits and Implications of OSS

Benefits for Online Sellers

OSS is designed to streamline the VAT reporting process for online sellers, bringing several benefits:

  1. Simplified Reporting: Sellers no longer need multiple VAT registrations across different EU countries, reducing administrative workload.
  2. Unified System: One consolidated return for distance sales within the EU, making it easier to ensure compliance and mitigate errors.
  3. Cost-Effective: Potential reduction in compliance costs since businesses handle fewer separate VAT registrations.

Challenges During Implementation

Although the long-term benefits are clear, the initial phase of OSS implementation may present challenges:

  • Registration Process: Sellers need to register by the end of each quarter to start using OSS in the following quarter.
  • Manual Reporting: In the first OSS quarter (Q3 2021), returns are manually submitted via the Federal Central Tax Office (BZSt) portal due to operational delays in digital implementations.

Registration Process for OSS

Steps to Register for OSS

  1. Sign-Up: Register via the OSS website of the Federal Central Tax Office (BZSt) by the end of a quarter prior to the intended start. For instance, to start from Q4, register by the end of September.
  2. Access BZSt Online Portal: Log in using a certificate file on the BOP portal. If a new user account is needed, account creation might delay registration.
  3. Complete the Form: Under "Forms and Services," locate and complete the "Registration notice for participation in the OSS EU regulation."
  4. Confirmation and Guidance: Receive a confirmation from BZSt, along with information on declaration periods and payment deadlines.

Practical Considerations

  • Contact a Tax Advisor: To navigate registration complexities, seek consultation from tax advisors specializing in OSS.
  • Keep Deadlines in Mind: Early registration is crucial to avoid delays and ensure a smooth transition.

What Transactions Are Excluded from OSS?

Despite its extensive coverage, OSS does not include:

  • Domestic Sales: These transactions must still be reported via standard VAT returns.
  • Imports and Purchases: Transactions not covered by OSS need separate reporting.
  • B2B Sales: These are excluded from OSS reporting and follow traditional VAT return methods.

Impact on EU and Non-EU Online Sellers

Changes for EU-Based Sellers

For sellers based within the EU, OSS simplifies VAT obligations but requires understanding key distinctions:

  • Single Country Storage: Only a single EU-wide €10,000 distance sale threshold applies, negating the need for VAT registration in each shipping destination country.
  • Multiple Storage Locations: Sellers storing goods in multiple EU countries must maintain VAT registrations in each of these countries.

Changes for Non-EU Sellers

Non-EU sellers, especially those without a business base in Europe, must consider these OSS implications:

  • No Distance Sales Thresholds: Removal of individual thresholds applies here as well.
  • VAT Registration for Storage Countries: Necessary for each country where goods are stored.
  • Deemed Suppliers: Sellers operating through marketplaces like Amazon may have different VAT reporting obligations compared to direct sellers.

Scenarios for Non-EU Sellers

  • Selling Through Deemed Suppliers: Marketplaces handle VAT compliance in the given EU countries.
  • Direct Selling Without Deemed Suppliers: Non-EU sellers must manage VAT reporting and registration for each country of storage.

Detailed Reporting Process Under OSS

Data Preparation for OSS

When submitting OSS returns, sellers must differentiate and report sales by:

  1. Service vs. Product: Separate categories for different VAT treatments.
  2. Domestic vs. Foreign Sales: Distinguish between sales within the home country and other EU member states.
  3. EU Countries and VAT Rates: Report sales based on applicable tax rates and the country-specific regular or reduced VAT rates.

Practical Steps for Manual Submission

  • Utilize BZSt Portal: Manual completion of forms remains necessary until digital submission options are available.
  • Organize Data: Prepare transaction data to smoothly align with OSS reporting criteria.

Conclusion: Embracing OSS for Efficient VAT Compliance

The OSS regulation represents a significant step towards simplifying VAT compliance for online sellers across the European Union. By understanding the registration process, adhering to reporting requirements, and leveraging the system's benefits, businesses can optimize their VAT handling and focus on growth. As the regulation continues to evolve, staying informed and prepared will be key in reaping the long-term advantages of the One Stop Shop.

FAQ

Do I need more than one registration after OSS? Yes, EU-based sellers need VAT numbers for each country where goods are stored. Non-EU businesses must register in their chosen OSS country.

Will I need to report all my sales to the OSS? No, only cross-border B2C sales need reporting through OSS. Domestic sales remain subject to standard local VAT returns.

How can I register for OSS? Register via the BZSt online portal, completing relevant forms by the end of the preceding quarter to the start date.

Do I need a special report for OSS? Yes, the report must cover all B2C cross-border sales fitting OSS structure criteria.

Can non-EU businesses use OSS reporting? Yes, non-EU businesses can register in a chosen EU country where they have VAT registration.

Are imports and expenses included in OSS reporting? No, OSS reports only include cross-border B2C sales, excluding imports and B2B transactions.