OSS Explained: How It Simplifies VAT Compliance

For cross-border sellers, especially those selling to multiple EU countries, how to efficiently and compliantly handle VAT filings for different places is often a headache. Fortunately, many countries and regions have also introduced some incentives aimed at simplifying this process. Among them, One Stop Shop (OSS) works as an effective solution that attracts a lot of attention.

Have you heard of OSS, but only know a little about this topic? For example, who can register for One-Stop Shop? How to register? If these questions are troubling you, then please continue reading! This article will provide a detailed explanation of OSS, helping you better understand how to use this scheme to streamline your VAT filing process and ensure your business stays compliant in the EU market.

What is One-Stop Shop (OSS) Meaning

One-Stop Shop (OSS) is an innovative system officially launched by the European Union on 1 July 2021 to simplify the value-added tax (VAT) compliance process for cross-border e-commerce sellers selling goods or services in multiple EU member states.

Traditionally, if you do business in several EU countries, you must file and pay VAT in each country separately according to the widely varying local tax laws. This not only greatly increases operational costs but is also prone to errors or omissions due to different countries' regulations.

However, the emergence of One-Stop Shop has completely changed this situation. It innovatively simplifies this complex process into a one-stop shop. By registering for VAT OSS in just one member state, you can centrally handle VAT matters for all EU countries, including tax filing, calculating, and refunds. Such convenience greatly reduces the hassle of VAT compliance for cross-border sales and saves a lot of time and effort.

Which to Register: Union OSS VS Non-Union OSS VS IOSS

OSS offers three flexible registration schemes: Union OSS, Non-Union OSS, and IOSS. You can choose the right one based on your transaction type and business nature. Below is a detailed comparison of them:

Union One-Stop Shop

This scheme is a facilitated filing scheme designed for businesses that conduct cross-border sales within the EU. You can apply for Union OSS registration and pay VAT via a single filing as long as you meet any of the following conditions:

1. EU-based Sellers: Your businesses registered in the EU that make distance sales of goods or provide services to consumers in other EU countries.
2. Non-EU Sellers: Your businesses are established outside the EU but have warehouses in the EU and sell goods to EU consumers through these warehouses.
3. Deemed Suppliers: You are deemed suppliers that deliver distance sales of goods within the EU and conduct domestic supplies of goods.

Non-Union One-Stop Shop

When you are a non-EU seller providing services to EU consumers, then you can register to Non-Union OSS. If the services involve multiple EU countries, then you can select one member state as the One-Stop Shop VAT registration country and declare all B2C sales across the EU in that country.

Import One-Stop Shop (IOSS)

Any non-EU sellers and EU sellers importing goods from a third country or region for sale in the EU, with a value not exceeding €150, can file and pay VAT via IOSS. This really helps simplify the customs clearance process. It is important to note that if you have no entity in the EU, you will need to appoint an intermediary to get Import One-Stop Shop registration, and the intermediary's country will be the country of registration.

A Quick Overview of Who Can Register for OSS/IOSS

How to Register to OSS/IOSS

Each EU member state has an OSS official website where you can register. A single registration will take effect for all your sales to other EU countries. The One-Stop Shop VAT registration process usually includes steps such as submitting the application form, providing relevant documents, and uploading sales data. Once successfully registered, you will receive an OSS/IOSS identification number.

However, this entire process is not something that can be easily explained in just a few sentences. Due to different regulations and application requirements in various countries, it is more complex and time-consuming. If you wish to focus on growing your business, it is strongly recommended to seek professional third-party assistance. VATAi is one of the trustworthy partners.

VATAi helps you determine whether OSS is suitable for your business and assists you in simplifying the registration process. You only need to provide the necessary company information and VATAi's professional OSS/IOSS solutions will handle the rest for you. Contact our experts now for more information!

How Does EU VAT One-Stop Shop Work

So how do One-Stop Shop schemes help online sellers simplify VAT filing? Next, we will explore in detail how OSS works to help you understand the mechanism behind it.

Single One-Stop Shop VAT registration

No matter how many EU countries your business covers, you only need to register once with OSS in one EU member state. In this way, you can easily manage all VAT matters throughout the EU through the OSS system.

One-Stop VAT Filing

Each quarter, you are obliged to submit a VAT return via the OSS portal in your chosen member state. This report usually includes information such as the OSS identification code, total VAT payable, B2C sales in each EU country, and its applicable VAT rate.

Simplified Payment Process

With the EU VAT One-Stop Shop, you pay VAT only once to your registered country's tax authority, which then distributes the taxes to the relevant EU member states based on their rates and your sales data.

Fully Digital

The OSS system is a fully online platform that allows you to complete filing operations on a computer or mobile device. Plus, all required documents are submitted digitally.

What Are the Benefits of One-Stop Shop VAT

Both EU sellers and non-EU sellers can benefit from OSS/IOSS. For example:

1. OSS handles all VAT matters in one place, saving you from the hassle of registering and filing returns in multiple countries and reducing your compliance costs.
2. With the streamlined VAT filing process, you can devote more of your effort to expanding and growing your business.
3. OSS helps effectively reduce the compliance risks caused by a lack of understanding of local tax laws.
4. You can sell products to consumers in multiple EU countries more conveniently, expanding your market reach.

FAQs About OSS

Is One-Stop Shop still applicable in the UK after Brexit?

Yes, but you have to know that if your business is established in the UK, you will need to select an EU member state as the OSS/IOSS VAT registration country rather than choosing the UK like you used to do.

However, for sellers based in Northern Ireland, you still follow the EU VAT rules. Therefore, you can directly register and use the EU VAT One-Stop Shop Union scheme to report and pay VAT on distance sales of goods to EU consumers in one place.

Is it necessary to get VAT registration for OSS?

Yes. A VAT registration is usually required for OSS/IOSS registration. Otherwise, you may fail to meet VAT obligations successfully.

Can you register for multiple OSS schemes?

Yes. Businesses established in the EU can use both the Union OSS scheme and IOSS scheme, while businesses outside the EU can use all three schemes, that is, Union OSS, non-Union OSS, and IOSS schemes.

How to select the country to register for OSS?

For EU-based sellers, you must start the OSS registration process in your country or region. For example, German sellers must register for German OSS, but not in France or Italy.

If your business is not established within the EU, you have the option to choose the country where your main sales market or warehouse is located as the destination of OSS registration.

How to Get Professional OSS/IOSS Services

This article offers a guide to the VAT One-Stop Shop (OSS) for you. All in all, OSS does provide an efficient solution for EU cross-border e-commerce sellers to simplify VAT filing and management.

However, are you still confused about OSS? Or you are not sure whether OSS is suitable for your business? VATAi is here to help! Our team, consisting of local tax consultants and experts, is always ready to provide you with professional advice. Also, we will offer comprehensive services for OSS registration, declaration, and VAT payment to ensure your smooth expansion in the EU market.