The One Stop Shop (OSS) scheme
One of the main features of the 2021 EU VAT changes is the newly extended VAT One-Stop-Shop scheme, which aims to ease the VAT compliance burden on online sellers. How does the new scheme work in practice? How can you benefit from it? And if so, what kind of obligations will you be bound to?
What is the new One Stop Shop (OSS) scheme?
OSS is an online portal, developed from the existing Mini One Stop Shop, that allows online businesses to report certain B2C EU supplies in a single Member State. As such, a single quarterly payment and VAT return will be due for the supplies covered by OSS, rather than multiple local returns and endless payments.
From multiple to a single VAT registration
As an e-commerce business, you would historically need to register for VAT with multiple tax administrations, OSS allows you to register onto the scheme in a single Member State (referred to as your ‘Member State of Identification’) which is then responsible for distributing the relevant VAT amounts you report and pay each quarter to the various Member States where your customers are located (called the ‘Member States of consumption’).
This brings a significant simplification for businesses who might no longer need to correspond with multiple tax offices.
An extended range of scheme users
With the extension of the MOSS into OSS, more taxpayers will be able to benefit from the VAT reporting simplifications.
Indeed, the existing Non-Union scheme will remain tailored to non-EU businesses –including UK-based traders. Simultaneously, the new Union-OSS will be accessible to EU and non-EU-businesses, including online marketplaces.
Not only the MOSS is being broadened to allow more taxpayers to use the different schemes, but its scope is also being extended to allow additional supplies to be reported through the portal.
The new OSS schemes will allow the following to be reported:
| Union OSS | Non-Union OSS | |
|---|---|---|
| B2C supplies of services by EU-based businesses | ✅ | ❌ |
| Distance sales of goods within the EU by both EU and non-EU sellers | ✅ | ❌ |
| Domestic sales of goods by online marketplaces when they facilitate the sale on behalf of a non-EU businesses | ✅ | ❌ |
| Non-EU sellers supplying services to EU-based consumers. | ❌ | ✅ |
Which EU VAT scheme is right for you?
Take our quick quiz to find out how the changes may affect you and how you can report your VAT going forwards.
VAT obligations under the new OSS
Once registered onto the new schemes, ecommerce businesses must report all their eligible supplies through the schemes rather than picking and choosing certain supplies. Essentially, you cannot decide to report certain sales through OSS, and others on a local VAT return.
In other words, OSS requires consistency but also to be vigilant with the local VAT rates to apply to each of your products in each of the country where your customers are located.
With single quarterly returns and payments due, businesses will have no excuse to miss the deadlines and penalties could be applied by the different Member States who will be eager to receive the VAT amounts they are due. Repeated failure to meet the deadlines on the current MOSS result in a business being expulsed from the scheme so it would be fair to expect the same treatment on the new OSS.
Lastly, you must be aware that OSS is purely to report payable VAT. This means that you can deduct any incurred VAT on the scheme like you would on a local VAT return.
Preparing for the launch of OSS
A few variables need to be considered for businesses to prepare for the changes. Which scheme can I use? What VAT rates should I apply? Where shall I register for OSS? With only a few months to go, make sure you invest in time to review your supply chain and how OSS can benefit your business in the future. Take our EU VAT quiz to see which scheme is right for you.
The new VAT One-Stop-Shop isn’t the only simplification that will be made available to ease the burden on e-commerce businesses. In fact, the EU is simultaneously launching a new Import-One-Stop-Shop for imported goods and introducing increased obligations for marketplaces to collect VAT.
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