The One Stop Shop (OSS) is a game-changer for online retailers selling in the European Union. Once you register the OSS scheme, managing your eCommerce VAT becomes considerably simpler. In many cases, the special scheme of OSS will also be much more efficient and cost-effective.
How Does OSS Work?
The One Stop Shop was introduced as part of the European Union’s VAT e-commerce package. With the OSS, you can account for the VAT on sales within the EU with a single VAT return. In order to understand how the process simplified VAT compliance, let's consider alternative mechanisms.
VAT On cross-border sales
Cross-border online distance sales of goods in the EU are subject to special distance sales of goods rules. In other EU countries when cross-border distance sales of goods in any given EU country exceed the distance sales of goods threshold, the EU seller must register for local VAT and pay VAT where required.
The process is further complicated because the thresholds are not uniform within the EU businesses. Sellers need to be aware of the threshold in each country they supply goods to EU customers through cross-border supplies. They then need also to carefully monitor sales and take action if they breach the threshold when doing cross-border supplies.
Once VAT-registered, you need to file a regular VAT return, pay VAT, and account for the VAT on sales in that country. Practically speaking, many online sellers thus have VAT obligations in multiple EU member states.
A consolidated VAT return
The union One Stop Shop streamlines the entire process. Under the OSS scheme, you only need to register in a single EU country. You then account for VAT on pan-EU sales with a single consolidated OSS return.
Under the OSS, the distance sales of goods threshold is also simplified. If you use this scheme, then a single threshold of €10 000 applies to sales within EU businesses.
Who Should Use OSS?
The union One Stop Shop is not mandatory. You can continue VAT registration in all countries in which you have an obligation, and comply with the local filing requirements.
However, considering the administrative demands (and associated costs) of compliance, most e-commerce businesses will benefit from the OSS if eligible. In short, if you sell goods throughout EU countries, the OSS is likely to save you time and money, and reduce the likelihood of error.
Note that the OSS only applies to goods that are already located within the EU at the time the sale is made. For goods outside of the EU, alternative VAT compliance mechanisms must be followed, such as the Import One Stop Shop.
In addition, businesses that warehouse and distribute goods in different countries may incur additional VAT obligations. In such cases, companies should consider consulting a VAT return specialist for full clarity on how to optimize compliance.
See related: What's the Difference Between IOSS and OSS?
How to Keep Seller Reports and Records With OSS
In order to comply with the VAT OSS, you need to file regular reports, including detailed sales data. These reports must include the country code specifying which EU member state each customer is located. You also need to provide a description of the goods and the amount of EU VAT due, among other obligatory data.
As with any EU VAT return, your OSS filings need to be complete, accurate, and up-to-date. Errors or omissions could leave you liable for penalties.
The best way to ensure full compliance, and reduce the possibility of errors, is to use advanced automated compliance VAT software that integrates into your existing systems.
How to Register for OSS
You can only register for the OSS in one country. If your business is established in one of the EU countries, then you should register through the OSS registration process in the country in which you are established.
Businesses that are not established in the EU should register in any EU state in which they have a fixed establishment. If they do not have a fixed establishment anywhere in the EU, the business can choose which country to register in.
Once registered for the OSS, businesses should ensure they have the processes and technology in place to file accurate electronic OSS returns.
A one-stop OSS compliance solution
As we can see, the One Stop Shop (OSS) is often a smart way to manage VAT on EU businesses e-commerce sales. However, businesses need the appropriate compliance software. In addition, retailers with multiple product lines may need to use various VAT compliance schemes, such as the IOSS.
As the world’s VAT compliance and recovery specialist, VAT IT can assess your company’s entire value chain to develop an integrated solution that optimizes your VAT compliance and maximizes domestic VAT return opportunities, international VAT return opportunities as well as provide other services. It’s a technology-driven solution that saves you time, saves you money, and ensures 100% VAT compliance, everywhere you do business.