One Stop Shop (OSS) system and changes to VAT
7 July 2021
7 July 2021
Until now, all e-commerce companies from the EU that sell goods to other EU countries, after exceeding a certain sales threshold (depending on the country the threshold ranges from 35,000.00 EUR to 100,000.00 EUR) were obliged to register and pay tax in the country of the buyer.
The European Commission made changes in this regard – from 1 July 2021 the above rule has been abolished and replaced with a new EU-wide threshold of 10,000.00 EUR (total to all EU countries). Below this new threshold, national VAT rules can still be applied to cross-border sales. For sales above this threshold, operators are required to pay VAT in the Member State, where their buyers are located. To do this, one can register for the new EU OSS system in the country where their company is based.
Each EU Member State will have an OSS web portal where businesses can register. However, this single registration will be valid for all sales to consumers in all EU member states.
Businesses will have to apply the VAT rate in force in the Member State to which the goods are shipped.
By outsourcing your accounting operations to our experienced accounting team, you can rest assured that your tax settlements will always comply with current local and EU legislation.
The assumptions of the OSS – One Stop Shop system are defined in the European Directive No. 2017/2455, which aims to simplify tax processes for e-commerce sellers. According to the new regulations, B2C goods supplies should be taxed at the destination.
The system makes it possible to report all shipments to end consumers made in Europe in a single consolidated VAT return, submitted in the country where the seller is established. As a result, traders who sell online to private individuals, will be taxed using the new method once the statutory threshold of 10,000.00 EUR is exceeded.
Operators have to submit a quarterly tax return showing the value of sales in each country of the European Union. What is important, the tax rates will be the same as in the country of the recipient of goods or services, although the tax settlement will take place in the country of the company’s registered office.
With OSS, only one registration with OSS system and recording of sales for 10 years will be required.
Entrepreneurs who sell through marketplaces such as Amazon, eBay etc. can also benefit from the One Stop Shop programme. However, if they additionally store their goods in Amazon warehouses (also outside the European Union, eg. UK), they may need to register for VAT. This applies in particular to those businesses that use the Pan-European FBA Programme. Any local sales from these warehouses, as well as transfers of these goods to and from another warehouse, must be reported on the national VAT return. A VAT number will be required for this purpose.
In order to comply with the new regulations, in some situations sales through trading platforms such as Amazon will be a two-step process. When a sale takes place, the seller will sell the goods to the trading platform on an intra-Community supply of goods (ICT) basis with a zero VAT rate. The trading platform will then resell the goods to the end customer with the additional VAT rate set in the country of destination.
If you sell online in Europe and need support with European VAT compliance, we invite you to use our dedicated service – amavat®. Our specialists will advise you on VAT compliance for e-commerce.
As the Directive indicates, the taxable person making use of this special scheme (or his intermediary) „…shall pay the VAT, making reference to the relevant VAT return at the latest at the expiry of the deadline by which the return must be submitted. Payment shall be made to a bank account denominated in euro, designated by the Member State of identification. Member States which have not adopted the euro may require the payment to be made to a bank account denominated in their own currency”.
If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.