One Stop Shop – Changes for Online Sellers

Table of Contents

1. Introduction
2. Background and Scope of OSS
3. Registration Process for OSS
4. Exclusions and Additional Reporting
5. OSS Submission Process
6. Conclusion
7. Frequently Asked Questions (FAQ)

Introduction

The introduction of the One Stop Shop (OSS) regulation marks a significant shift in the way VAT is managed within the EU for e-commerce businesses. The OSS is an extension of the Mini One Stop Shop (MOSS) that simplifies VAT obligations for online sellers across the EU, unifying them under a more streamlined system. This change, effective from July 2021, is designed to reduce administrative burdens and encourage compliance. In this comprehensive guide, we'll explore the OSS's benefits, registration process, scope, and specific implications for both EU and non-EU based online sellers, ensuring you are fully prepared for these transformative changes.

Background and Scope of OSS

The OSS system extends the principles of the MOSS, which initially covered telecommunications, broadcasting, and electronic services, to include all B2C services and distance sales of goods within the EU. This means businesses will no longer need to maintain separate VAT registrations in each EU country where they sell goods, provided they do not store goods in those countries.

Key Benefits of OSS

The primary advantage of the OSS is the significant reduction in the complexity of VAT filings for businesses selling goods across multiple EU countries. Instead of navigating different VAT systems and thresholds for each country, businesses can file a single VAT return through their home country's tax authority. This centralization simplifies the process, saves time, and reduces potential errors.

Simplified VAT Reporting

For example, a company storing goods in its home country and selling into multiple EU nations will only need to submit one home VAT return and one OSS VAT return per period. The transition to the OSS system eliminates the need to manage multiple VAT registrations across Europe, provided the business does not store goods in other member states.

Registration Process for OSS

Registration for the OSS is straightforward but necessitates timely planning. Businesses wishing to adopt the OSS must register through their national tax authority's online portal. For example, German businesses can access the Federal Central Tax Office's portal to complete their registration. This process involves logging in with existing credentials or setting up a new user account if needed. Early registration is advisable to avoid delays and ensure compliance.

The registration must be completed by the end of a quarter to start using the OSS in the subsequent quarter. Upon submitting the necessary forms, businesses will receive a confirmation from their tax authority detailing the approval and providing information on declaration periods and payment deadlines.

Exclusions and Additional Reporting

While the OSS simplifies many aspects of VAT reporting, certain transactions are excluded and require separate filing:

• Domestic sales within an EU country where the business stores goods
• Imports, purchases, and B2B sales

Specific Scenarios for EU and Non-EU Sellers

Different rules apply depending on whether the seller is based within the EU or outside of it. Here’s a detailed look at common scenarios for both EU and non-EU sellers:

EU-Based Sellers

Single Country Storage

For EU companies storing goods only in their home country, like Alpha Services in Germany, OSS allows them to report all distance sales to other EU countries through a single VAT return without needing multiple VAT registrations.

Multiple Country Storage

Companies like Beta Products, storing goods in multiple EU countries, must maintain VAT registrations in each country where storage occurs. For them, the OSS does not eliminate the requirement to register for VAT numbers where they store goods.

Non-EU Sellers

Direct Sales without Deemed Suppliers

Non-EU sellers such as Gamma Ltd, which directly sells to EU consumers from their home country without using a deemed supplier (e.g., Amazon), must handle VAT differently. These sellers are responsible for customs duties and import taxes upon delivery to EU customers.

Using Deemed Suppliers

For non-EU companies like Delta Limited selling via platforms like Amazon, the platform acts as a deemed supplier and handles VAT collection and remittance. Such companies need VAT registration in their warehousing location but can manage cross-border sales via OSS.

Practical Examples

Here are a few practical examples of how these regulations apply:

Example 1: Alpha Services

Scenario: German-based company storing goods only in Germany.

Outcome: Through OSS, they avoid maintaining multiple VAT registrations across the EU, simplifying their VAT obligations significantly.

Example 2: Beta Products

Scenario: German-based company with storage in multiple countries (Germany, France, Italy, Spain)

Outcome: They still require VAT registrations in each of these countries, with OSS simplifying cross-border transactions but not removing the necessity for multiple VAT registrations.

Example 3: Gamma Ltd

Scenario: UK-based non-EU company selling directly to EU consumers without a marketplace facilitator.

Outcome: They collect customs duties and taxes upon import into the EU, needing only UK VAT registration but managing sales under broader EU import regulations.

OSS Submission Process

Despite the intended simplification, initial technical challenges have occurred. For Q3 2021, OSS returns cannot be submitted digitally through automated systems and must be manually filled out via the Federal Central Tax Office's portal. The forms require detailed information sorted by product type, VAT rate, and the destination country to ensure appropriate VAT handling.

Data Requirements

Businesses must submit aggregated data rather than individual transactions, easing the administrative burden while ensuring compliance with VAT laws. Adequate preparation, aided by tax advisors familiar with e-commerce and OSS nuances, can significantly smooth this process.

Practical Steps

1. Service vs. Product Sales: Separate reporting for services and products.
2. Domestic vs. Foreign Sales: Clear distinction in reporting.
3. Sorting by EU Country and VAT Rate: Separate declarations for each tax rate and destination country.

Conclusion

The OSS regulation, while initially presenting some administrative challenges, offers a streamlined, centralized solution for managing EU-wide VAT obligations. Both EU and non-EU based sellers can benefit from reduced complexity and enhanced compliance through centralized VAT returns. Businesses should ensure timely registration, maintain clear records, and consult with tax advisors to navigate the nuances of the new system effectively.

Frequently Asked Questions (FAQ)

Do I need more than one registration after OSS?

Yes, you will need to apply for VAT numbers in your home country or nominated EU country, and any other EU 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 via OSS.

Is there anything else I need to report besides OSS returns?

Yes, you need to report domestic sales through the standard VAT returns in each country where you store goods.

How to register for OSS?

Registration is straightforward via your national tax authority's online portal. Ensure you complete this by the end of a quarter for it to be effective from the next quarter.

Can non-EU businesses use OSS reporting?

Yes, non-EU businesses can choose an EU country for their OSS registration, provided they have a VAT registration there.

Implementing the OSS can significantly streamline your VAT processes, reduce administrative burdens, and enhance compliance. As the system evolves, staying updated and ensuring proper adherence will be crucial for seamless operations and growth in the European market.

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