Q. What is the One Stop Shop?
The One Stop Shop (OSS) is an optional quarterly VAT reporting and payment system that’ll be live from July 1, 2021, as part of the EU VAT e-commerce package. This means that you can use the OSS to report and pay VAT on non-domestic B2C sales of the following types across the EU:
a) cross-border supplies of services
b) online intra-community distance sales of goods (selling VAT-applicable goods located in one EU country to a customer in another EU country)
Using the OSS, you can account and pay for VAT across EU with just one return. This is an extension of the Mini One Stop Shop (MOSS) that previously allowed you to file a single EU return for B2C sales of TBE (telecommunication, broadcast, and electronic) services.
Q. What’s the purpose of the OSS?
The OSS has been introduced to ease the seller’s burden of having to register for VAT returns in each EU member state where there are customers. With the OSS, there’ll be a single EU VAT return for ecommerce distance selling which the seller can file from their home country.
Q. Who can use the OSS?
The OSS applies to any business making B2C sales in the EU (including charities and NGOs).
Q. What are the different kinds of OSS?
There are 2 kinds of OSS:
a) Union OSS
If your business is established in the EU, you can use the Union OSS to report VAT on intra-community distance sales and non-domestic sales of services to EU customers.
If you’re established outside the EU, you can use the Union OSS, but only to report intra-community distance sales of goods.
b) Non-Union OSS
If your business is not established in the EU, you can use the non-Union OSS to report VAT only on sales of services to EU customers. To do this, you’ll have to register with the tax authority in an EU country of your choice.
Note: The pan-European threshold of €10,000 (£8,600) will apply only if you have a fixed establishment (a permanent address from which to make supplies) in an EU state. If you only have a VAT number in an EU country, that won’t be considered a fixed establishment.
Q. Is it mandatory to use the OSS or IOSS?
Neither is mandatory. However, once you register, you should use the OSS or IOSS (Import One Stop Shop) for all applicable sales to EU customers. If you don’t want to use it, you’ll have to register for, account for, and pay VAT in each EU country you sell to. UK sellers who don’t use the OSS or IOSS will have to zero-rate their exports for domestic VAT (the goods will still be taxable under VAT, but the rate charged will be 0%) and apply VAT for imports.
Q. How is OSS going to affect me as a seller?
Starting July 1, 2021, if you’re shipping goods from your home country to customers across the EU, you can use the OSS to report your sales across the EU. When you move from MOSS to the OSS, you can now use it to report any B2C service sale that’s subject to destination VAT, not just telecommunications, broadcasting, and electronic services.
If you’re an ecommerce seller, you can close your foreign VAT registrations and, instead, file a quarterly OSS return for your home country’s tax authority.
The existing country-specific EU distance selling thresholds will be removed and replaced with a single pan-European threshold of €10,000 (£8,600).
Q. What should online marketplaces do about the OSS?
Under the VAT e-commerce package, online marketplaces become deemed suppliers. This means that a marketplace can opt to use the OSS to report VAT for intra-community supplies between EU countries. If the marketplace facilitates a domestic supply of goods by a non-EU seller, it can use the Union OSS to report and pay VAT.
Q. Which state should I register in?
If you want to register for the OSS, you can do so in any EU member state or in the UK, as long as:
You’ve registered for VAT in that EU member state, or
You’re trading with the EU under the Northern Ireland protocol
If you cross the new pan-European threshold of €10,000 (£8,600) and want to use the UK’s OSS, you’ll have to register for VAT in the UK if you haven’t already. Note that if you’re using the OSS, you’ll have to register for VAT even if your overall turnover falls below the the usual UK VAT registration threshold of £85,000. If you don’t want to use the OSS, you don’t need to register for UK VAT, as long as you register and account for VAT in each EU member state to which you’re dispatching goods.
Q. When can I register for the OSS?
To register for the Union or non-Union OSS, you’ll have to apply and wait until the following quarter for your registration to become effective. So, for instance, if you register after July 1, 2021, your registration will become effective in October 2021 when the next quarter begins.
After you’ve applied, you may make supplies before your registration has become effective. If you do so, you’ll have to inform this to the tax authority in the relevant EU member state where you’ve registered. This should be done by the 10th of the month that follows the first supply you made after applying. This supply and the rest that follow will be counted together. For example, if you applied on July 15 for your registration to become effective in October, and you make a supply on July 30, you should inform the tax authority about it by August 10.
Note: If you had previously signed up for the non-Union MOSS, the EU member state that you registered in may reach out to you for more information related to the non-Union OSS. The only change in your process would be reporting more services via the non-Union OSS.
Q. What should I do once I’ve registered for the OSS?
Once you’ve registered for the OSS, you should use it to account for VAT on all distance sales. You should also continue to file VAT returns in your own country. The OSS is a simplified return for non-domestic VAT, so you should continue to report your domestic supplies via the domestic VAT return.
The process for using OSS is similar to MOSS, where the VAT rate of the destination country (wherever you’re selling to) is charged at the point of sale, and then reported and paid on a quarterly basis via the online portal.
If your distance sales takes place through an online marketplace that’s in charge of supplies within the EU, the marketplace will have to account for VAT using OSS. Besides this, if you’re a B2C service provider or an event organiser, you can use the OSS VAT return to report your pan-EU sales, and you don’t have to register for VAT in each country.
If you have stock in warehouses (even if you use the Fulfilment by Amazon program) in other EU states, you have to remain foreign VAT registered in those states after July 2021.
Q. Can I use the OSS to reclaim input VAT or offset VAT returns?
No. The OSS only allows payment of output VAT and can’t be used to reclaim input VAT.
Q. I have a business in Northern Ireland. How will the OSS affect me?
Under the Northern Ireland protocol, the EU VAT rules apply only to goods, and not services. So if you run a business in Northern Ireland and opt to use the OSS, you’ll have to report all distance sales of goods through the Union OSS, but use the non-Union OSS for services.
Q. I have a business in the UK, and sell to EU customers. How do I use the OSS, and what happens if I don’t use it?
If you have a fixed establishment in an EU country, you can register for the Union OSS in that country and use it for sales of goods. If you don’t have a fixed establishment but want to use the Union OSS for intra-community distance sales, register in the country that your goods are being sent from.
If you carry out intra-community distance sales, then you can register for the Union OSS and use it to account for VAT.
If you’re selling to EU customers through an online marketplace, then you won’t need to account for VAT on intra-community distance sales or B2C domestic sales within the EU. Your marketplace will take care of it.
If you don’t have a fixed establishment and you sell services to EU customers, choose any EU country to register and use the non-Union OSS.
If you don’t opt to use the OSS, you must register for VAT in each country that you’ll be selling your supplies to.