Those who delve into the complex world of European VAT legislation inevitably come across the One Stop Shop (OSS) scheme. For international business, it is crucial to understand this arrangement. In this article, we explain how the OSS scheme works and how it can help you.
Or watch the video here, in which our VAT expert Joke explains it to you in detail:
This is what you need to know to file your One Stop Shop tax return
The MOSS scheme was a success for e-commerce services: so it was extended to distance sales and other private services. This comprehensive scheme was named One Stop Shop, also known as the one-stop shop system or Union scheme. Since July 1, 2021, it has been in effect in all EU countries.
The old national threshold amounts have expired, and have been replaced by one general European threshold amount of 10, 000 euros for all distance sales. This means that you as a business owner have to think about what VAT you have to pay. For example, do you choose to sell your products for a fixed price throughout the EU? Or do you opt for price differentiation by country? This is important because you reach the new threshold amount of 10,000 euros quite quickly.
From July 1, 2021, companies will pay VAT to other EU countries where they supply products if they exceed the threshold amount of 10,000 euros. A One Stop Shop tax return only needs to be filed once per quarter, with the tax authority of the country in which your business is located. The Inland Revenue then distributes in your name the appropriate amount of VAT to the other EU countries in which you trade.
What are the benefits of the One Stop Shop?
The main benefits of the OSS scheme are:
- No more need for separate VAT numbers: you only need a VAT number in the country where your business is registered. Handy huh? But: be careful if you have stock stored elsewhere, such as through Amazon FBA. Below we tell you more about it!
- More time to spare: you no longer spend time on all the separate, local VAT registrations. You still only need to process all transactions once per quarter in the OSS return. Therefore, you also no longer have to worry about different declaration deadlines.
- Less money spent on international bank transfers: Instead of paying VAT to local European tax authorities, you pay an x amount to the Dutch tax authority (or the tax authority of the country in which you are registered). Care will be taken to ensure that the right amount reaches the right country!
Registering for the OSS scheme is not mandatory, but it makes the process much easier. Should you incur hardly any expenses abroad, the OSS scheme is a good match. You then only have to pay VAT in your return and not reclaim it. But should you put stock abroad (for example) and incur expenses for this? Then you may still need VAT registration.
However, it should not be both: either you file a tax return through the One Stop Shop or through local tax authorities. But, there is an exception. We discuss those below.
Here’s how to sign up for the One Stop Shop
The big key question: how do you sign up for the OSS? You can do so at the Tax Office via “My Tax Business“. Note that when you register for the OSS scheme, you must de-register in the countries where you have a VAT number.
How does the OSS ruling affect Amazon sales (including FBA)?
Amazon distinguishes two modes of shipping:
- Fulfilled By Merchant (FBM): shipping by seller. Do you yourself send all products to (European) customers from the Netherlands? Then the threshold amount and the OSS rule apply as described above.
- Fulfilled By Amazon (FBA): shipping by Amazon. If you are a business owner using the FBA program, things get a little more complicated. Indeed, it then becomes a combination of the OSS scheme and local VAT administration. Because you use FBA, Amazon can deposit stock in other EU countries with fulfillment centers. And when you have stock in another (EU) country, you are liable for VAT there.
That combination cuts your VAT records in half. You must now declare VAT both through local returns, and through the OSS. This is the aforementioned exception!
- In the countries from which stock is shipped, you need VAT registration. All sales with that country as destination, must be declared in a local VAT administration.
- On sales to customers in the EU from a country from which no stock is shipped, and where you have no local VAT registration, you do have to pay local VAT. This can be done through the OSS scheme!
If I pay VAT for local returns, am I paying double with the OSS?
Only cross-border transactions are included in the One Stop Shop declaration. Local transactions must still be reported in local returns. So there is no overlap or double payment!
How can I apply for a foreign VAT number and file VAT returns?
We are also happy to help you with your One Shop Stop declaration. With our Staxcloud software, you always and everywhere have insight into your VAT: this way you know exactly how much VAT you owe per country. If you prefer not to spend time on VAT administration, we can also do your VAT returns for you. Schedule a consultation, and we’ll see what we can do for you.