Main changes for VAT-OSS
OSS – Sell into 27 EU countries with one VAT registration
On 1 July 2021, all European Union countries rolled out the new e-commerce VAT system, including One-Stop-Shop (OSS).
In a previous blog, we explained the Main changes for VAT in the EU.
How does OSS work?
The OSS scheme simplifies the conditions for sellers trading
within the EU to VAT register in each country they sell to.
The scheme is optional and applicable for EU and non-EU
sellers. Companies must register with a single member state to file an OSS return for their business-to-consumer (B2C) sales of goods within the EU. Foreign VAT registration will still be required for sales from a warehouse or fulfillment center in another country.
- VAT returns are submitted quarterly via local OSS
- The payment deadline is one month after the end of the reporting period
- No more obligations to issue invoices
- Only one clearing office, i.e., no more bank transfers to numerous EU states
- Corrections can be made within a future VAT return by stating the period that has to be corrected
OSS abolish the need for VAT registration in EU countries
where you sell but do NOT in countries where you store the goods.
What are the benefits of OSS?
One of the simplifications is filing one OSS return covering all of your EU VAT cross-border obligations for B2C sales. So, this is regarding cross-border, business-to-consumer only – you will still need to file your standard VAT return on your home country or countries where you store goods.
The OSS file VAT returns to your home country, in case of EU sellers – or chosen country, in case of Non-EU sellers – which will be processed by the country home office, and money due to other EU countries will be sent to them by the tax office.
- Different country’s distance thresholds will be replaced by one EU-wide of 10,000 euro.
- Reduced administration costs
- OSS means reduced bureaucracy and overheads as your business works with one EU country tax authority in one language
- Declaring and paying due VAT in a single VAT return
- File one OSS return that covers all of your EU VAT obligations for your B2C sales
What is excluded from OSS?
There are a lot of transactions that are excluded from OSS and need separate reporting, such as:
Domestic sales mean sales to clients in the same country as the warehouse and from where products are sent.
For example, if you store goods in Austria and ship them to an Austrian end consumer, you have to report that by a standard VAT return to the Austrian VAT office. Indeed, you would need to be registered for VAT in Austria.
- B2B sales are NOT included in OSS.
- Purchases, imports, and expenses are NOT reported in OSS.
Example 1 – Company only stores in DE
The German-based company sells online to consumers from
France, Austria, and Poland, but only stores in Germany. Due to this, a home VAT number is in place for Germany. Goods are not stored in France, Austria, or Poland, so under OSS, no VAT registration is required in these countries.
Let’s take a look at how VAT is assigned for the company in this business model:
German VAT will be paid via a standard return in the usual way;
VAT for sales to France, Austria, and Poland will be paid to Germany via the standard VAT return, up to the crossing of the 10,000-euro EU distance selling threshold; Sales for France, Austria, and Poland will be calculated at the local VAT rate for each country.
Example 2 – Company stores in 4 EU countries
The German-based company also sells online to France, Austria, and Poland. The company doesn’t only store goods in Germany, but also in the other three countries where it is selling. This means VAT payment is required in all four countries.
Let’s take a look at the situation VAT will be filed and by what means:
German VAT (Germany to Germany transactions) is paid via a standard VAT return. The same happens for France, Austria, and Poland.
VAT on B2C sales for which products are sent cross-border from France, Austria, and Poland, are paid via OSS return filing;
Sales for France, Austria, and Poland are calculated at the local VAT rate for each country.
You need to apply for VAT numbers in your home country in the EU or your chosen country in the EU if you are a NON-EU home client. Also, you need to apply for VAT numbers in all EU countries where you store goods.
Do we also report B2B transactions in the OSS report?
No, B2B transactions would be reported via the standard way.
Is there anything else we need to report except OSS return?
Yes, the company needs to report domestic sales in the standard country VAT return. If you store in other countries, you need to report those countries’ domestic sales in their local VAT reports.
Do we need a special report for OSS?
Yes, the report needs to match the OSS structure. It needs to cover all B2C cross-border sales from all the dispatch countries.
Who can file my OSS report?
The OSS report can be filed by everyone you have registered authorization for (in some countries, you might be limited to authorizing only licensed accountants or tax advisors).
Is OSS a mandatory report?
No, you can stay with standard reporting. This means that you might have to register in all EU states to which you sell your products.
What to choose – the regular reporting or reporting via OSS?
To minimize administrative costs, it is advised to use the OSS reporting option.
Can NON-EU businesses use OSS reporting?
NON-EU companies can choose the country in which they will
get registered for OSS. The only condition is that the company needs to have a
standard VAT registration in that country.
Are expenses/imports included in OSS report?
OSS reporting is only for cross-border B2C sales.