One Stop Shop – Changes for Online Sellers

Table of Contents

1. Introduction
2. What Is the One Stop Shop (OSS)?
3. Key Benefits of the OSS
4. Registering for the OSS
5. Impact on EU-Based Online Sellers
6. Impact on Non-EU Online Sellers
7. OSS Filing Procedures
8. Conclusion
9. Frequently Asked Questions (FAQs)

Introduction

The landscape of e-commerce in the European Union (EU) has undergone a significant transformation with the introduction of the One Stop Shop (OSS) regulation as part of the EU VAT reform starting July 1, 2021. This new system aims to streamline the process of VAT declarations for businesses conducting cross-border sales within the EU. However, while the long-term benefits are clear, the initial stages of registration and adaptation can be complex.

In this post, we will delve into the major changes brought by the OSS, how businesses can register, and the impact of these changes on both EU-based and non-EU-based online sellers. Additionally, we will offer guidance on effectively managing the new VAT requirements and highlight the key steps necessary for compliance.

What Is the One Stop Shop (OSS)?

Previously, the Mini One Stop Shop (MOSS) was an electronic system tailored for service providers offering telecommunications, broadcasting, and electronic services (TBE) within the EU. MOSS allowed these providers to declare and pay VAT in a single Member State rather than tackling the complexities of multiple national VAT systems.

From July 1, 2021, the OSS scheme expanded to cover all business-to-consumer (B2C) services in the EU where the supplier is not established, including distance sales of goods. The OSS now also applies to certain domestic supplies of goods facilitated by electronic interfaces. Alongside OSS, the new Import One Stop Shop (IOSS) has been introduced for distance sales of low-value goods imported from outside the EU.

Key Benefits of the OSS

The OSS is designed to simplify the VAT return process for businesses, potentially reducing administrative burdens in the long-term. In the short-term, however, businesses and tax authorities might encounter some challenges as they adapt to the new system.

Streamlined VAT Returns

For instance, companies storing goods in their home country and selling to multiple EU countries can submit a single VAT return for their home country and another through the OSS. This consolidation means fewer filings compared to the previous requirement of individual VAT registrations in each country of sale.

Single EU-Wide Threshold

The old distance sales thresholds have been abolished under OSS, except for businesses with single-country storage. A new EU-wide threshold of 10,000 euros now applies. This means that businesses registered with OSS do not need to register for VAT in each country they ship to, provided there is no local storage.

Registering for the OSS

Registration Process

To use OSS, businesses need to sign up through the Federal Central Tax Office (BZSt) online portal. This process involves logging in with a certificate file and completing the necessary forms under "Registration and Login." It's advisable to register early to avoid delays, especially considering that creating a user account for the portal can be time-consuming.

Responsibilities Post-Registration

After registration, businesses receive written confirmation and information on declaration periods and payment deadlines. It’s crucial to consult with tax advisors if there are any uncertainties during the registration to ensure compliance.

Continuous Reporting Requirements

Despite OSS’s simplification, it does not cover all types of VAT reporting. Domestic sales and imports, purchases, and business-to-business (B2B) transactions still require standard VAT returns. For example, if a company ships goods stored in Italy to Italian consumers, it must still file a standard VAT return in Italy.

Impact on EU-Based Online Sellers

Abolition of Distance Sales Thresholds

For EU-based companies, the previous distance sales thresholds per country have been replaced with a single 10,000-euro threshold across the EU. This means less paperwork and fewer VAT registrations are required for cross-border sales where there is no local storage.

Storage Requirements

However, if goods are stored in multiple EU countries, VAT registration is still required in each storage location. Domestic sales within these countries must be reported separately.

Example - Single Country Storage

A German company selling to France, Italy, and Spain without storing goods outside Germany only needs a home VAT number. Under OSS, there is no need for additional VAT registrations in these countries.

Example - Multiple Country Storage

Conversely, a company storing goods in Germany, France, Italy, and Spain must maintain VAT registrations in all four countries. OSS will streamline cross-border sales reporting but does not negate the need for registrations in storage countries.

Impact on Non-EU Online Sellers

Distance Sales Thresholds

Non-EU businesses with no physical presence or storage in the EU are also subject to the unified 10,000-euro threshold, simplifying VAT compliance for exporters.

Deemed Supplier vs. Direct Sales

Non-EU sellers may either operate through deemed suppliers like Amazon or directly through their own websites. VAT obligations vary accordingly:

Marketplace Scenario

A UK company selling through Amazon may need to maintain VAT registration in the UK and potentially OSS for EU sales if goods are stored within the EU.

Direct Sales Scenario

A non-EU company like a UK-based seller storing goods outside the EU can use OSS for cross-border B2C sales while remaining responsible for standard VAT returns on domestic and intra-country sales.

OSS Filing Procedures

Initial Submission Hurdles

In Q3 2021, OSS returns cannot be submitted via a digital upload or automated portal. Businesses need to fill out forms manually on the BZSt portal, a process expected to improve over time.

Data Requirements

OSS returns require detailed data, sorted by product type, delivery countries, and VAT rates. Ensuring compliance involves separating foreign and domestic sales, services versus product sales, and categorizing transactions by storage countries.

Efficient Pre-Registration

Companies can simplify OSS pre-registration by working with tax advisors specializing in e-commerce, who can automate data separation, quality control, and submission of OSS notifications.

Conclusion

The OSS regulation marks a significant change in the VAT landscape for online sellers in the EU. While it aims to streamline VAT compliance, businesses must navigate the complexities of registration, continuous reporting, and adapting to the new system. By understanding the requirements and leveraging expert advice, businesses can efficiently transition to OSS and benefit from its streamlined processes.

Frequently Asked Questions (FAQs)

Do I Need More Than One Registration After OSS?

You will need VAT numbers in your home country or nominated country in the EU and in all EU countries where you store goods.

Will I Need to Report All My Sales in the OSS Report?

No, only cross-border B2C sales are included in the OSS report. Domestic sales continue to be reported via standard VAT returns.

Is OSS Mandatory?

No, businesses can choose standard reporting, but this requires registering in all EU states where products are sold.

Can Non-EU Businesses Use OSS Reporting?

Yes, non-EU businesses can register for OSS in an EU country where they maintain a standard VAT registration.

Will OSS Reporting Include My Expenses/Imports?

No, OSS reporting is strictly for cross-border B2C sales. B2B transactions and imports must be reported through standard methods.

By keeping abreast of these changes and effectively managing OSS reporting, businesses can ensure compliance and potentially reduce administrative burdens associated with VAT filings in the long run.