One-Stop-Shop (OSS) and
In July 2021, a new VAT package was introduced in the European Union to make online commerce easier, the One-Stop-Shop (OSS) and Import-One-Stop-Shop (IOSS) schemes.
- The Import One-Stop Shop Scheme (IOSS)
- The One-Stop-Shop Scheme (OSS)
- What is the OSS scheme important for?
- Who can make use of the OSS scheme?
- How does OSS work?
- What is there to consider with OSS invoices?
- The VAT return with OSS application
- The registration for OSS and IOSS
- What are the consequences of not using OSS/IOSS?
The Import-One-Stop-Shop Scheme (IOSS)
Online traders are to be relieved of the burden of declaring and paying import VAT by the new IOSS system. The IOSS system applies to online retailers who import and sell goods (under €150) from third countries, i.e. outside the EU. It facilitates the registration and payment of import VAT.
The system allows merchants to pay and declare VAT instead of buyers. Import VAT must be collected and paid on all goods imported from non-EU countries (with the exception of Northern Ireland).
The IOSS system applies only to B2C transactions to EU customers.
The One-Stop-Shop Scheme (OSS)
The One-Stop-Shop scheme regulates and simplifies VAT registration and reporting in the same way as the IOSS scheme, except that it applies to online retailers within the EU and not, like the IOSS scheme, outside the EU.
What is the OSS scheme important for?
Companies that sell goods in the EU that exceed a certain value must register for and pay VAT in each Member State in which their customers are located. This procedure is enormously time-consuming and costly if a company has to register in several countries, and for this the OSS scheme provides a way out. Because of this new requirement, the registration and the VAT collection runs only through one central office, which means that companies have to register in only one office for tax purposes, hence the term One-Stop-Shop.
Who can make use of the OSS scheme?
In principle, the scheme applies to online retailers whose companies are based in the EU. However, it is also possible to register for the OSS system if you are based outside the EU. However, the prerequisite for this is that your own country has concluded an agreement with the EU on mutual administrative assistance. This is currently the case for only a few countries. It is also possible to register as a non-EU resident if you have a local representative that you have appointed at the local tax office.
How does OSS work?
In general, the system is there so that you no longer have to register for VAT for every country you import or sell goods into. Instead, there is one body that stands overarchingly for all countries in which traders operate.
The OSS system offers two regulations:
The Union OSS system
This applies to taxpayers who contribute in the EU and non-EU companies.
The non-Union OSS system
This applies to companies that provide services to the B2C sector and are based outside the EU.
When applying the OSS system, companies must apply the VAT rates of the Member State of destination in which the goods are supplied or the services are rendered.
What is there to consider with OSS invoices?
If suppliers are not required to issue an invoice according to national regulations, they do not have to do so if they make intra-Community B2C sales and are registered for the OSS Union system. If the sale is B2B goods or services, the rules of the Member State where the supplier is registered apply anyway.
The VAT return with OSS application
Online sellers must apply the VAT rates of the Member State to which they supply goods or in which they provide services. Online vendors must file quarterly VAT returns in the state where they are registered for the OSS system. These records must be saved and archived for 10 years.
The registration for OSS and IOSS
Registration for the new e-commerce systems has been possible since July 1, 2021.
What do you need to consider when registering?
In general, companies should register in the country from which their own goods are shipped. If a company ships goods from more than one country, it can choose a distribution location and register for the system there.
With the IOSS system, EU suppliers can either register in their member state or use an intermediary to do so. Registration is then done through the local IOSS authority. If they are from a non-EU country, they are required to register through an intermediary based in the EU. Now, once registered for IOSS, one gets a VAT number which is then valid for all transactions that fall under the IOSS rule.
What is the consequence of not using OSS / IOSS?
The use of the novel systems is voluntary. If a company decides not to use the systems, in this case the customer must be charged VAT as normal.
IOSS and OSS therefore offer many advantages and allow a better comfort and customer service towards the customer. We keep you informed with this article about the latest rules and requirements around OSS and IOSS!
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Muzaffer Havcarci
INPOSIA e-Invoicing-Spezialist
