Everything you need to know about the One-Stop-Shop (OSS) Scheme
Selling goods and services to customers in the European Union (EU) comes with certain tax obligations, particularly regarding Value Added Tax (VAT). As each EU country has its own VAT rates and tax rules, staying compliant can be quite complex for businesses, even if they are not based in Europe. The European Commission has attempted to simplify VAT collection and payment procedures through the introduction of the One Stop Shop (OSS) scheme. This guide provides an overview of the key concepts related to VAT and the OSS, including where and how to register for VAT collection, how to calculate and collect VAT, and how to file VAT returns. It also explores how services like Stripe Tax can help businesses maintain full compliance with EU VAT regulations. Understanding the OSS and its benefits is crucial for any business selling to customers in the EU, as it can significantly streamline VAT reporting and payment obligations across all EU-27 countries.
What is the One Stop Shop (OSS)?
The One Stop Shop (OSS) is an extended and simplified VAT scheme introduced by the European Union on July 1, 2021, to streamline VAT obligations for businesses selling goods and services to consumers across the EU. It replaces the previous Mini One Stop Shop (MOSS) scheme, which was put in place on January 1, 2015.
The OSS covers a wider range of supplies and offers further simplifications to help businesses overcome barriers to cross-border online sales and address challenges arising from the VAT regimes for distance sales of goods and importation of low-value consignments. Under the OSS scheme, businesses can register for VAT in a single EU Member State (known as the Member State of identification) and use a web portal to electronically submit VAT returns and pay VAT due on all eligible supplies made to customers in other Member States. This eliminates the need for businesses to register for VAT in each Member State where they have customers, significantly reducing red tape and compliance costs.
The OSS encompasses three special schemes:
- The non-Union scheme
- The Union scheme
- The import scheme
The non-Union and Union schemes already existed under MOSS but have been extended in scope, while the import scheme is newly introduced.
Navigating VAT compliance and the OSS scheme is challenging, especially for businesses entering EU markets. Lawants offers comprehensive international legal services tailored to help businesses understand and meet EU VAT obligations efficiently. With our expertise, we guide companies through each compliance step, from VAT registration to OSS reporting, ensuring a smoother transition into the EU market. Contact us
What has changed from the previous scheme?
The introduction of the OSS brings several key changes compared to the previous MOSS scheme:
- The OSS covers a wider range of supplies, including distance sales of goods within the EU and certain domestic supplies facilitated by electronic interfaces.
- The previous distance selling thresholds have been abolished and replaced by a new EU-wide threshold of €10,000. Below this threshold, supplies may remain subject to VAT in the Member State where the taxable person is established.
- The €22 VAT exemption for imported small consignments has been removed, meaning all goods imported into the EU are now subject to VAT.
- Online marketplaces and platforms facilitating supplies of goods are, in certain circumstances, deemed for VAT purposes to have received and supplied the goods themselves (“deemed supplier“).
- New record-keeping requirements have been introduced for online marketplaces and platforms that facilitate supplies of goods and services, even when they are not a deemed supplier.
By introducing these changes, the OSS aims to create a more level playing field for businesses, reduce VAT compliance costs, and ensure fair taxation across the EU e-commerce landscape.
If you want to know more, read our guide to Spain E-commerce law.
What is VAT in the EU?
VAT, or Value Added Tax, is a consumption tax applied to most goods and services sold within the European Union (EU) — see for example VAT rates in Spain. It is levied on the value added to the product at each stage of production, distribution, and sale to the end consumer. In essence, VAT is paid by consumers in the price of the goods they purchase, and businesses are responsible for collecting and remitting the tax to the appropriate authorities.
The EU VAT system is based on the “destination principle,” meaning that VAT is typically due in the country where the goods or services are consumed, not where they are produced. This means that businesses selling across borders within the EU must carefully consider their VAT obligations in each country they sell to. Failure to comply with VAT regulations can result in significant penalties and fines, making it crucial for businesses to stay informed and adhere to the relevant laws.
Who can register to the OSS scheme and what transactions are covered
The VAT OSS schemes are available to taxable persons established both within and outside the EU. Taxable persons established in the EU can use the Union scheme and the import scheme, while those not established in the EU may potentially use all three schemes: the non-Union, Union, and import schemes.
A taxable person, in the context of the OSS, is a business (company, partnership, or sole proprietor) that has either established its place of business or has a fixed establishment in the EU. For the non-Union scheme, a taxable person is a business not established in the EU. The concept of a deemed supplier is also important, referring to a taxable person who facilitates a supply of goods through an electronic interface (e.g., marketplace, platform, or portal) and is treated as the supplier for VAT purposes.
The OSS covers various types of transactions, including:
- Cross-border supplies of telecommunications, broadcasting, and electronically supplied (TBE) services to non-taxable persons within the EU
- Intra-Community distance sales of goods
- Certain domestic supplies of goods facilitated by electronic interfaces
- Distance sales of goods imported from third territories or countries, except for excise goods
Using the OSS is optional for taxable persons. However, once opting into the scheme, it must be applied to all relevant supplies in all applicable Member States. This means a taxable person cannot choose to use OSS for supplies in some Member States while not using it for supplies in others.
Understanding the legal nuances of cross-border VAT compliance requires more than just technical knowledge. At Lawants, our international legal team provides targeted solutions, helping businesses avoid costly VAT penalties and smoothly navigate the One-Stop-Shop system. Our international legal services offer clear guidance, empowering businesses to focus on growth rather than complex tax rules. Contact us
How to register to the One Stop Shop
To register for the VAT OSS scheme, businesses must first select the EU Member State where they will be identified for VAT purposes. This will be the Member State of Identification (MSI) where VAT declarations are made and VAT is paid. EU businesses should generally register in their home Member State, while non-EU businesses can choose any Member State, usually opting for the country with the most customers or easiest registration process.
The registration process involves submitting an online application to the tax authority of the chosen MSI. Required information typically includes:
- Company details (name, address, contact information)
- VAT or tax identification number
- Start date for using the OSS
- Other EU countries where sales will be made
Supporting documentation may also need to be provided, such as proof of VAT registration or identification documents. Once the registration is processed, the business will receive a unique OSS identification number, beginning with “EU” for non-EU businesses. Existing MOSS registrations have automatically been migrated to the OSS.
Businesses newly registering for the Union scheme must declare and pay VAT on all in-scope supplies through the OSS once registered. Non-EU businesses registering for the non-Union scheme can use the OSS portal for B2C supplies of services across the EU, though additional local VAT registrations may still be needed for transactions outside the OSS.
Declare and pay in OSS
Under the VAT One Stop Shop (OSS) scheme, taxable persons or their intermediaries must submit electronic OSS VAT returns for each tax period, even if no supplies were made. The tax period is quarterly for the non-Union and Union schemes and monthly for the import scheme. The OSS return and payment are due by the end of the month following the tax period.
The OSS return details the supplies made to customers in each Member State of consumption. For the Union scheme, services supplied from the Member State of identification are reported separately from those supplied from fixed establishments in other Member States. Intra-Community distance sales of goods are also reported based on the Member State where the transport begins. The Member State of identification splits the OSS return by Member State of consumption and shares the details with the relevant tax authorities. A unique reference number is generated for each return, which the taxable person must include when making the corresponding VAT payment. Nil returns must be filed for periods with no reportable transactions.
Corrections to previous OSS returns can be made within three years by amending the original return. Taxable persons must keep records of OSS transactions for ten years to support tax authority audits. By simplifying VAT reporting and payment obligations across the EU, the OSS scheme reduces administrative burdens and compliance costs for businesses engaged in cross-border e-commerce. However, it is important to point out that in the return submitted through the One-Stop-Shop, VAT paid in Member States of consumption cannot be deducted; it only includes VAT collected. To recover VAT paid in other States, the VAT payer must submit the refund procedure for non-established entities in accordance with relevant directives.
The benefits of the One Stop Shop
The VAT OSS scheme offers numerous advantages for businesses selling goods and services across the European Union:
- The VAT OSS scheme simplifies VAT compliance for businesses selling goods and services across the EU.
- Reduces administrative burden by allowing companies to register for VAT in a single Member State rather than multiple countries.
- Streamlines VAT obligations, helping businesses avoid penalties for non-compliance.
- Creates a more level playing field for EU businesses, fostering growth in a fairer environment.
- Helps businesses overcome barriers to cross-border online sales.
- Benefits consumers by ensuring the VAT rate on purchases is consistent with that in their home country.
- Ensures VAT is paid where goods are consumed.
- Increases public revenues for EU Member States through improved VAT collection and reduced VAT fraud.
- Fosters a more competitive and equitable digital economy across the European Union.
The One Stop Shop with Lawants
Navigating the complexities of the VAT OSS scheme can be challenging for businesses, particularly those new to selling goods and services across the European Union. This is where Lawants’ expert team of international lawyers, accountants, and tax advisors can help. With a deep understanding of EU VAT regulations and the One Stop Shop system, Lawants is well-equipped to guide businesses through the registration process, ensuring full compliance with VAT obligations in all relevant Member States.
By partnering with Lawants, companies can take advantage of the benefits offered by the OSS scheme, such as reduced administrative burdens and a more level playing field for cross-border e-commerce. Lawants’ comprehensive services cover all aspects of VAT compliance, from determining the appropriate Member State of identification to preparing and submitting quarterly OSS returns. With Lawants’ support, businesses can confidently expand their operations across the EU, knowing that their VAT affairs are in the hands of experienced professionals dedicated to their success.
Keeping accurate and compliant financial records is essential for VAT compliance under the OSS scheme. Lawants’ accounting consultant services are designed to help businesses manage accounting records in line with EU standards, ensuring smooth reporting and reducing the risk of errors or penalties. Let our team help you streamline your VAT obligations with expert accounting support. Contact us
Related articles:
- VAT Rates in Spain: Understanding Spanish VAT Taxes and Compliance
- Commercial and Corporate Litigation in Spain
- Spanish Commercial Code: Understanding Business and Corporate Law in Spain
- Consignment Stock in Spain: VAT and Taxation
- Call-off Stock in Spain: Procedure and VAT
- Posting Workers to Spain: Guide to Laws, Requirements and Compliance
