What The 2021 One-Stop Shop Means For Online Sellers
This is a guest post by our friends at HelloTax, specialists in VAT compliance and ecommerce tax automation.
The introduction of the One-Stop Shop (OSS) initiative in July 2021 brought about a number of changes affecting online sellers and their taxes in Europe.
And not just sellers, either. Any active business owners or stakeholders on any of the online marketplaces are likely to be impacted by the changes.
New rates, recipients, and criteria for eligibility have been defined, so anyone with business interests in or around Europe needs to get up to date.
Here, we’ll be covering:
Table of Contents
A Quick Intro To OSS
The One Stop Shop, or OSS for short, is a new system designed to make the payment of VAT across the EU easier. It also helps avoid tax arbitrage.
It follows the Mini One Stop Shop, or MOSS scheme, which had similar goals but was only applicable for providers of electronic and telecommunication services.
Those who register for the OSS will be able to declare and register all their B2C distant sales in and across European countries within one return, submitted to the country of their OSS registration.
This rule applies as long as wares are only sold to customers in a specific country, but not stored in warehouses there.
Changes For Online Sellers
With the introduction of the OSS came a few fundamental changes for online sellers.
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A new EU-wide threshold
Until the introduction of the One-Stop Shop, online sellers were only subject to VAT in a certain country if their annual turnover through sales to that country exceeded the its VAT threshold.
This limit was set at € 35,000 in most EU countries (e.g. Spain, France, Austria) with some exceptions such as the € 100,000 limit in Germany and the Netherlands.
Once a seller crossed this threshold, they would have to register for VAT in that country and start submitting regular VAT returns.
However, with the introduction of the One-Stop Shop, the country-specific thresholds were abolished in favor of an EU-wide VAT threshold of only € 10,000.
For example, an online seller might record an annual turnover of € 9,500 in Germany and € 1,000 in Spain. Since they have exceeded the single EU-wide threshold of € 10,000, they must collect and remit VAT in both of those countries.
Before reaching that threshold, sellers should be collecting and remitting VAT within their home countries only, according to their individual requirements.
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VAT rates
One main change of the One-Stop Shop is that the local VAT rate must still be applied.
Take our seller from the example above who has nexus with Spain and Germany. Even if just one sale has come from Spain, it should be taxed with the Spanish rate.
This should simplify VAT responsibilities whilst making VAT arbitrage impossible.
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OSS tax returns
Only one return needs to be completed, regardless of the number of countries with which a seller has nexus.
Separate registration for each country is no longer necessary, and everything has become centralized.
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VAT payments
Similarly, separate VAT payments to each individual country’s tax offices are also no longer necessary.
The seller need only register for OSS in one country and send all VAT there for remittance.
The redistribution to appropriate countries is handled by that tax authority on the seller’s behalf.
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The limit of OSS
The regulations of the One-Stop Shop apply as long as wares are only sold to foreign end customers, but not stored in those foreign countries.
Once products are stored in a different European country, a VAT registration in that country is then due.
Sales from the foreign warehouse to consumers in the same country then need to be declared in a separate VAT return.
OSS Registrations And Thresholds
Registering for OSS comes with a number of advantages, but not all sellers may need to use it.
If sellers meet the following criteria, then OSS makes sense:
- Distance-selling (and not storing in Europe).
- Selling in multiple European countries.
- Annual turnover of over € 10,000 in Europe.
For smaller turnovers, or for businesses using programs like Amazon FBA, it may not make sense to use OSS.
Instead, opting for specialists to tailor a solution and even manage their returns for them might be the best answer.
HelloTax is one example of this kind of provider. With tools to automate VAT returns, filing, and even payments, everything is taken care of for sellers.
And even for sellers that do opt for OSS, having an expert onside can be invaluable to ensure all obligations are met without costing you hours of precious time you could be spending on other areas of your business.
Check out HelloTax today for your VAT compliance needs.
