One Stop Shop – Changes for Online Sellers

Table of Contents

1. Introduction
2. Understanding the One Stop Shop (OSS) Framework
3. Registration Process for OSS
4. Scope and Limitations of OSS
5. Specific Scenarios for OSS Implementation
6. Implications for Non-EU Online Sellers
7. OSS Reporting Requirements
8. Conclusion
9. Frequently Asked Questions (FAQ)

Introduction

Imagine a seamless marketplace where online sellers can navigate the European Union’s complex VAT regulations with ease. Intrigued? The EU's One Stop Shop (OSS) regulation, introduced in July 2021, aims to simplify the VAT return filing process for e-commerce businesses. This transition is part of a broader VAT reform targeting e-commerce, designed to eliminate individual country delivery thresholds and streamline tax obligations across the EU. This comprehensive guide will delve into the significant changes and implications for online sellers, both within and outside the EU, that come with the introduction of OSS.

Understanding the One Stop Shop (OSS) Framework

The Evolution from Mini One Stop Shop (MOSS) to OSS

Before July 2021, the Mini One Stop Shop (MOSS) scheme was utilized by service providers in telecommunications, broadcasting, and electronic (TBE) services to declare and pay VAT in one Member State, which was then distributed to other relevant EU countries. The introduction of OSS expands this concept, covering all business-to-consumer (B2C) services, distance sales of goods within the EU, and certain domestic supplies facilitated by electronic interfaces. Additionally, the Import One Stop Shop (IOSS) scheme was introduced to handle VAT on low-value goods imported from non-EU countries.

Key Benefits and Initial Challenges of OSS

The OSS is designed to simplify VAT returns and reduce the administrative burden of managing multiple VAT registrations across EU Member States. The primary benefits include:

1. Unified Reporting and Payment: Instead of registering for VAT in each country where goods are sold, businesses can file a single OSS VAT return and make one payment per period.
2. Ease of Compliance: This reform is expected to streamline EU VAT regulations over time, despite initial complexities during its implementation.

However, businesses might face short-term challenges as tax authorities establish registration processes and businesses adapt to the new laws.

Registration Process for OSS

Steps to Register

To take advantage of OSS, businesses must register by the end of a quarter to use the system in the following quarter. Registration can be completed via the Federal Central Tax Office (BZSt) online portal using existing portal access info or by creating a new user account if necessary. The specific steps involve:

1. Log in to the BZSt Portal: Access the "Registration and Login" section.
2. Complete the Registration Form: Enter the required data and submit the form.
3. Confirmation: The BZSt will confirm the registration in writing along with information on declaration periods and payment deadlines.

Role of Tax Advisors

Businesses unsure about the registration process or the suitability of OSS can consult tax advisors. Advisors like the hellotax team can provide guidance on registration and OSS-related queries across multiple countries including Italy, France, Poland, Czech Republic, Germany, Spain, the Netherlands, Sweden, and Ireland.

Scope and Limitations of OSS

Transactions Not Included in OSS

Certain transactions are explicitly excluded from OSS and necessitate separate VAT reporting:

1. Domestic Sales: These must be reported through the standard VAT return to the respective national tax authority.
2. Imports and B2B Transactions: These continue to be reported via the traditional VAT return mechanism.
3. Sales with Multiple Storage Locations: Businesses storing goods in several EU countries must register for VAT in each storage country.

Specific Scenarios for OSS Implementation

Scenario 1: Single Country Storage

For EU-based companies like Alpha Services, which only store goods in their home country and sell to other EU countries (e.g., Germany storing in Germany but selling to France, Italy, and Spain), the OSS will allow them to avoid multiple VAT registrations. They will only need home country VAT and register sales through OSS.

Scenario 2: Multi-Country Storage

In contrast, a company like Beta Products, which stores goods in Germany, France, Italy, and Spain, will require VAT registrations in each of these countries. Despite OSS, storage in multiple countries mandates separate VAT filings for each location.

Implications for Non-EU Online Sellers

Changes in VAT Registration

For non-EU businesses, distance sales thresholds in individual EU countries have been eliminated. Non-EU companies must:

1. VAT on Home Country Sales: Home country sales must be reported via the standard VAT return in the non-EU business's chosen Member State for OSS.
2. Customs Duties: End consumers will bear customs duties and import taxes for goods shipped directly from outside the EU.
3. Multiple Storage Registrations: If the business stores goods in various EU countries, VAT registrations are required in each storage country.

Different Sales Models

Deemed Supplier

A marketplace or similar platform acting as a deemed supplier must fulfill specific criteria. For example, non-EU companies selling through platforms like Amazon may find OSS beneficial, especially if they store goods in the EU.

Direct Sales

Non-EU companies selling directly without intermediaries must consider VAT implications carefully. For instance, a UK company selling directly to EU consumers without storing goods in the EU will treat sales as exports, with customers paying import duties upon delivery.

OSS Reporting Requirements

Data Submission and Reporting

In the initial OSS quarters (Q3 2021), returns must be manually submitted through the BZSt portal. Data needs to be categorized by:

1. Service vs. Product Sales: Separate listings for services and product sales.
2. Domestic vs. Foreign Sales: Distinguish between domestic and cross-border sales.
3. Country-Specific VAT Rates: Declare transactions based on relevant VAT rates in each EU country.

Assistance from Specialized Tax Advisors

Navigating the complexities of OSS can be daunting. Tax advisors like hellotax provide specialized services to help automate transaction separation, ensure data accuracy, and submit OSS advance notifications efficiently.

Conclusion

The EU’s One Stop Shop (OSS) regulation represents a significant shift in the VAT landscape for e-commerce businesses across and outside the EU. By simplifying the VAT return process and reducing administrative burdens, OSS offers substantial benefits in the long term. However, the initial implementation may pose challenges, making it essential for businesses to seek appropriate guidance and support. Understanding and complying with the new regulations will empower online sellers to harness the full potential of the European e-commerce market.

Frequently Asked Questions (FAQ)

Do I need more than one registration after OSS?

Yes, you will need VAT numbers in your home country or nominated country within the EU, and for all EU countries where goods are stored.

Will I need to report all my sales through OSS?

No, OSS only covers cross-border B2C sales. Domestic sales must be reported through standard VAT returns in each respective country.

How do I register for OSS?

Registration is straightforward but must be completed by specific deadlines. Specialized advisors like hellotax can handle registrations for multiple European countries.

Is reporting via OSS mandatory?

No, it is not mandatory but highly recommended to reduce administrative costs and simplify compliance.

Can non-EU businesses utilize OSS?

Yes, non-EU businesses can select an EU Member State for OSS registration, provided they have a standard VAT registration in that country.

Understanding and navigating the new OSS regulations can be challenging, but proper compliance will ensure smooth operations and access to the vast EU market for online sellers.

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