As an online entrepreneur operating internationally within Europe, you have undoubtedly heard of the One-Stop Shop (OSS). This scheme, established by the European tax authorities, is intended to simplify VAT handling. But what happens if you do not adhere to these rules? In this article, we delve deeper into this subject.
What Is The One-Stop Shop?
In a nutshell: the One Stop Shop is a scheme that allows you to declare and pay VAT in one EU country for all sales within the EU. This means that as an entrepreneur, you do not have to declare VAT separately in each country where you sell. A very handy scheme that saves you time and money, provided it is correctly implemented.
What Happens If You Ignore The OSS Rules?
The tax authorities enforce strict rules for the application of the One-Stop Shop. Non-compliance with these rules can lead to a number of unpleasant consequences, such as:
Fines and Sanctions
The first and most obvious risk of non-compliance with the OSS rules is that you can receive a fine from the tax authorities. The amount of these fines varies per country, but can amount to thousands of euros.
Administrative Complications & OSS ban
By ignoring the One-Stop Shop rules, you also risk facing a tangle of different VAT rates and declaration procedures. Indeed, if you repeatedly fail to comply with the OSS declaration rules 3 times, you are excluded from participating in the One-Stop Shop. In that case, you have 2 options: 1) you stop selling internationally altogether, or 2) you declare VAT separately in each country where you sell. For this, you also have to arrange VAT registrations and also take into account the different declaration procedures and language barriers. Quite a bit more complex than the OSS, right? These are significant additional administrative burdens, which lead to more potential errors, which in turn can lead to additional fines. When you are excluded from the One-Stop Shop, the ban applies for two years throughout Europe.
Moreover, non-compliance with the OSS rules can also lead to reputational damage. After all, customers can view you as an unreliable seller, which can lead to a decrease in sales and negative reviews. And of course, no one wants that.
How Do You Prevent These Problems?
Fortunately, complying with the OSS rules is relatively straightforward. It starts with registering with the One-Stop Shop tax authorities in the country where you are based. Then you need to ensure that you apply the correct VAT rates to your products and services, and that you submit your returns on time.
If this still sounds difficult, or if you would prefer to outsource it: schedule a conversation with us, and we will look at your situation together and provide personal advice. Of course, this is without obligation.
Failure to comply with the One Stop Shop rules can lead to fines, administrative complications, and reputational damage. It is therefore of great importance that as an online entrepreneur, you understand and comply with these rules.
If you still have questions about the One-Stop Shop rules or need help implementing them, please do not hesitate to contact us for tailored advice. It is better to take action now than to be confronted with the consequences later.