Today, businesses selling goods above a certain threshold to multiple EU Member States are required to register and pay VAT in each Member State their customers are located. For many, this means registering for VAT in several jurisdictions, which is often a time-consuming and costly process. The One-Stop Shop (OSS) scheme introduces the capability for VAT to be paid to a single tax authority on sales in all EU Member States.
A similar measure – the Mini One-Stop Shop (MOSS) – has existed since 2015. It introduced major VAT simplifications for non-EU businesses supplying digital goods and services to consumers in Member States. Now its scope has been extended and MOSS has become OSS.
Just like in the case of MOSS, there are two schemes applied under the One-Stop Shop. The Union OSS scheme is for taxpayers operating businesses established in and outside the EU; the non-Union OSS scheme is for businesses supplying B2C services and established outside the European Union.
Businesses can utilise the electronic OSS system to comply with VAT obligations on B2C sales within the EU as of 1 July 2021. They need to apply the VAT rates of the destination Member State where the goods are delivered or the services are supplied.
For B2C intra-community distance sales of goods, suppliers are not required to issue an invoice if they are registered for the OSS Union scheme. This applies unless suppliers are obliged to do so by national rules in their Member State of identification.1
For B2B, if the supplier registers for one of the schemes, the invoicing rules of the Member State in which they are registered still apply. B2B sales do not fall under the VAT rules for distance selling.
When trading, online sellers and electronic interfaces have to apply the VAT rate of the Member State to which the goods are delivered or the services are supplied. VAT is to be collected from the buyer for both intra-EU distance sale of goods and supply of services.
Additionally, suppliers are to submit a quarterly electronic VAT return via the OSS portal to the Member State where they are registered. The VAT declared in the return must be paid quarterly in the same Member State where the supplier is registered for OSS. The records of all eligible sales facilitated by OSS must be kept for 10 years.2
The Import One-Stop Shop (IOSS) is another new scheme that allows non-EU established suppliers to collect, pay and declare VAT instead of buyers in the case of distance sales of imported goods in the EU.
All goods imported into the European Union from non-EU countries, except Northern Ireland, 3 are subject to import VAT, regardless of value. The IOSS facilitates the declaration and payment of import VAT on low-value goods (less than EUR 150). If the value of goods is higher than EUR 150, traditional import VAT rules apply.
If the IOSS is used, VAT due will be included in the price paid by the customer. The importation of the goods into the EU will be treated as VAT-exempt.
Registration for OSS and IOSS has been available since 1 July 2021. The Member State you should register in depends on a variety of factors, such as the type of supplies you are engaged in, establishments you might have in the EU and whether you fall under the scope of the Union or non-Union scheme.
Businesses should register in the origin country from which the goods are dispatched. If the goods are dispatched from multiple EU countries, the supplier can choose one of their distribution locations and register with that Member State.
Each EU Member State will have an online OSS portal where businesses can register and apply OSS rules for transactions made on or after 1 July 2021. This single registration is valid for all eligible dispatches made by online sellers, including those made or facilitated by electronic interfaces.
The OSS contact list of the Member States can be found here.
EU suppliers can either register for IOSS in their Member State or appoint an intermediary. Non-EU suppliers will have to register through an intermediary established in the EU. The Member State will assign the Non-EU resident individual a VAT identification number (using the format EUxxxyyyyyz).
It should be noted that use of the OSS and IOSS is optional. However, once registered for a scheme, the VAT due on all eligible supplies within the scope of that scheme must be returned under the same relevant scheme.
1 The Member State of identification is the Member State in which the taxable person is registered for using the One-Stop Shop, and where it declares and pays the VAT due in the Member State(s) of consumption. Source: Guide to the mini One Stop Shop (MOSS)
2 10 years from the end of the year in which the supply was carried out.
3 According to the technical note on the Northern Ireland Protocol published by the EU, OSS and IOSS must be implemented in Northern Ireland.