Does the One Stop Shop (OSS) apply to me? We’re hearing this question a lot, for good reason. The OSS has far-reaching VAT implications for e-commerce sellers in Europe. Here’s a brief overview to help you understand how the OSS affects your business.
When does the OSS apply to me?
If you sell goods online to customers in the EU, you will likely benefit from the new e-commerce OSS. The OSS simplifies VAT registration and filing, enabling businesses to account for VAT on sales in multiple EU countries with a single digital VAT return.
In short, if you are an e-commerce retailer that sells to customers in EU states, the OSS will probably be applicable to your business. However, there are certain instances in which the OSS will not apply. Moreover, as the OSS is optional, there are occasions on which an e-commerce business may choose not to use the OSS. Let’s consider some of them.
Your sales don’t meet the OSS threshold
If the annual sale of good and/or digital services to customers throughout the EU is less than €10 000 then your sales will be considered domestic supply. In that case, the OSS will not be relevant.
Similarly, if you currently sell to customers in a number of states, but do not exceed the distance selling threshold in any state. In such cases, you may not face any obligation to register in those countries. Thus, the OSS may not provide any additional benefit.
Drop shipping and the IOSS
If you sell ‘low value goods’ (currently defined as items valued at no more than €150) that are located outside of the EU at the time of sale to customers in the EU, then a different VAT compliance mechanism applies.
In such cases, the Import One Stop Shop (IOSS) is the appropriate system to manage VAT compliance and expedite imports.
When multiple registration are advantageous
There are occasions on which you may be have multiple VAT obligations even when using the OSS. For example, in cases where you warehouse goods in multiple countries.
However, in some circumstances, there may be advantages to registering in multiple countries. Doing so may, for example, provide benefits in terms of reclaiming or deferring VAT.
Note, though, that these can be highly technical considerations. They depend on the specific operations and objective of each business. Businesses should consider consulting a VAT expert for full clarity.
Get in touch with Vatglobal’s expert e-commerce VAT team for full clarity and assistance with all your VAT compliance needs.