Anyone who dives into the complicated world of European VAT legislation inevitably stumbles upon the One Stop Shop (OSS) – sometimes referred to as the one-stop-shop scheme or union scheme and the Mini One Stop Shop scheme (MOSS). Anyone who also wants to conduct business internationally will need this vital knowledge on the one stop shop scheme!
So… What do I need to know to process my VAT return through the One Stop Shop (OSS) scheme?
One Stop Shop Scheme since July 1, 2021
If you provide telecommunications, broadcasting or electronic/digital services to private individuals within the EU, you can make use of the one stop shop scheme. The OSS scheme as we know it today became an official regulation on July 1 2021, and extended out of a previous regulation known as the MOSS (Mini One Stop Shop) scheme. In the past, the MOSS scheme entailed that entrepreneurs could declare VAT via one country, namely the country where their business was registered, as opposed to registering individual VAT returns and payments for every country their customers were located in. This worked really well for e-commerce services, so it’s been extended to distance selling and other privately-oriented services!
Since July 1, 2021 this has been called the One Stop Shop scheme and is valid for all EU countries. This scheme also includes a threshold of €10,000 for all distance sales conducted within the EU. Previously under the MOSS scheme entrepreneurs only needed to register VAT in an EU country where they conducted business if they exceeded the threshold amount of that country. Today businesses are required to pay VAT in all other EU countries for all transactions to customers above €10,000, and this can be done without multiple VAT registrations through the OSS scheme. Via an OSS application and login code with the Dutch Tax Authorities (Nederlandse Belastingdienst), an entrepreneur can easily file a VAT return and his/her foreign VAT is paid via the Tax Authorities and arranged to the other EU countries.
Since July 1 2021, for VAT payments a threshold amount of €10,000 in delivery and services applies to all EU countries, not just the country where your business is registered. This means that as an entrepreneur you have to think about the structure of your sales. For example, will you choose to have your product(s) sell at a fixed price throughout the EU? Or will you opt for a price differentiation per country? This is really important because you can reach the threshold of €10,000 relatively quickly!
What are the benefits of the One Stop Shop scheme?
The two main advantages of the OSS scheme are:
- no need for separate registrations abroad
- less costs and more time due to fewer registrations
It is good to remember that the OSS scheme is a choice and as an entrepreneur you can of course still register abroad. If you run up relatively few costs abroad, the OSS scheme is a good match because in the OSS scheme you only pay VAT and do not reclaim it. On the other hand, if for example you have a significant amount of stock abroad and costs attached to this? Then a VAT registration may be necessary.
How can I sign up for the One Stop Shop scheme?
You can register for the OSS scheme via the Dutch Tax Authorities (Nederlandse Belastingdienst). Please note that when you register for the OSS scheme, you must deregister as an entrepreneur in all countries where you are registered for VAT.
What are the consequences of the One Stop Shop scheme on Amazon sales (incl. FBA)?
Amazon sales distinguish between two shipping methods:
- FBM (fulfilled by merchant): shipping by seller
Do you send all products to customers in the EU from the Netherlands yourself? In that case, the threshold amount and the OSS scheme as described above apply. Are the threshold amounts exceeded? Then you are obliged to pay a local VAT payment with the option of making use of the OSS scheme.
- FBA (fulfilled by Amazon): shipping by Amazon
If you use FBA as an entrepreneur, your VAT administration becomes a bit more complicated. It then becomes a combination of the OSS scheme and the local VAT administration because when you use FBA you have stored local stock in the Amazon warehouses in various countries. As a result, the combination of the above regulations has a two-part administration. Firstly, countries where stock is shipped have a local VAT registration, and all sales within any such country as the destination must be declared locally. Secondly, sales to customers in the EU where no stock is sent, and where there is no local VAT registration, must be paid local VAT based on the destination principle. This VAT is paid via the OSS scheme.