Let’s consider what OSS is – a system for registering and paying VAT in the EU for companies.
And let’s talk about how to pay VAT on sales to individuals in the EU. Previously, when a certain sales threshold was exceeded in a certain European country, a company had to register as a VAT payer in each such country where the threshold was exceeded. In 2021, a reform took place and the OSS system was introduced, which significantly simplified the registration and accounting procedure for businesses if sales take place in several countries.
OSS (One Stop Shop) is a simplified system for registering and paying VAT (VAT) in the EU for companies engaged in sales of goods or services to end consumers (B2C) in different EU member states. It was introduced as part of the reform of the EU VAT rules in July 2021 to reduce the administrative burden for businesses and unify the taxation process.
How does OSS work?
Single point of registration:
- A company can register in the OSS system in one EU country (for example, in the country of its establishment or activity).
- This avoids the need to register for VAT in each country where there are consumers.
Reporting: - The company files one simplified report via OSS, indicating the total sales in each EU country.
- VAT payments are automatically allocated between the countries where the sales were made.
Coverage: - OSS applies to sales of goods and certain services to end consumers (B2C), including:
- e-commerce (goods sold online);
- digital services (video streaming, e-books, etc.);
- telecommunications and language services.
Limits: - The general threshold for mandatory use of OSS is €10,000 per year. If the company does not exceed this amount, it can apply the VAT of its country.
Advantages of OSS
- Simplification of administration: Instead of registering separately in each country, the company operates through one system.
- Transparency: All transactions are easily traceable.
- Business convenience: Reduced VAT accounting and management costs.
What are the OSS options?
The OSS system is divided into several schemes:
Union OSS: For companies registered in the EU.
Non-Union OSS: For companies outside the EU that provide services to consumers in the EU.
IOSS (Import One Stop Shop): For goods up to €150 imported from outside the EU for sale to consumers.
How to register for OSS?
Apply for registration through the tax administration of the country where the company wants to register.
Get a unique OSS number.
Start using the system for reporting and paying VAT.
Who is it useful for?
OSS is particularly convenient for:
- Sellers of goods through platforms (Amazon, Etsy, etc.);
- Digital service providers;
- Companies that sell cross-border in the EU.
