The EU’s e-commerce VAT package launched on 1 July 2021. What changed 1 July 2021 with EU e-commerce VAT package
Update: as part of the approved VAT in the Digital Age scheme, the use of OSS will be extended to movement of own goods from 1 July 2028.
- EU and non-EU sellers only need 1 VAT return, ‘One-Stop Shop’ (OSS) for B2C distance selling of goods, traditional services and digital services
- The distance selling thresholds are withdrawn. VAT must always be charged at the rate of the consumer’s country of residence.
- Option to register for OSS in your home country or any EU state for non-EU (including UK post-Brexit) sellers as your country of identification
- Charge consumers for sales the VAT rate applicable in their country of residence
- A single, OSS quarterly return covering all distance sales in any of the EU 27 states are due due by the end of the following month
- The tax authority where you distribute this VAT on your behalf to the appropriate member states
- Sellers with multiple EU registrations for distance selling may deregister now.
- MOSS digital services returns have ended, and these sales are reported through the OSS
- OSS has also been extended to a range of traditional services, including ticket event sales.
- For sellers below €10,000 total B2C sales in other EU member states, they are exempted from the obligation to charge local VAT; instead they charge their home country taxes.
- OSS is voluntary, and does not enable the recovery of any local VAT incurred. For this reason, a very few sellers may want to retain their multiple registrations
- See separate IOSS Import One-Stop Shop new return for reporting imported sales to consumers not exceeding €150. Non-EU sellers do not need an Intermediary for OSS as they do for IOSS.
HOWEVER: sellers holding stocks in other EU states (e.g. Amazon’s warehouses) will still need foreign VAT returns for these transactions. Marketplaces deemed supplier VAT new rules also mean seller transactions on electronic interfaces may shift to the facilitating marketplace.
Preparing OSS or IOSS returns can be challenging. VAT Calc’s single platform VAT Filer can accurately complete either filings with verified transactional data from our VAT Calculator or VAT Auditor integrated tools.
EU simplifies VAT registrations and returns
Since 1 July 2021, the new One Stop-Shop OSS VAT return has enabled B2C distance sellers of goods to file just a single pan-EU VAT return to report their sales in any of the 27 member states. It was introduced as the distance selling thresholds were withdrawn, and is part of the wider EU ecommerce VAT package reforms introduced at the same time.
The EU’s e-commerce package aims to simplify VAT compliance for online sellers of goods. The OSS return builds on the success of the Mini One-Stop Shop MOSS return introduced in 2015 for reporting B2C digital services sales across the EU. It means sellers will no longer have to wrestle with varying VAT rules and foreign languages, as well with multiple VAT returns and foreign payments to different tax authorities.
The EU’s OSS reforms were originally scheduled for 1 January 2021, but were delayed until July 2022 because of the COVID-19 crisis.
Withdrawal of the EU distance selling threshold
Prior to 1 July, the EU did not require e-commerce distances sellers transacting in other EU states to immediately start charging the local VAT of the consumer or be VAT registered. Instead they could charge their own country’s VAT rate and report through their regular domestic VAT return.
They were only obligated to get VAT registered in another EU state when they crossed the country’s distance selling threshold. Until 30 June 2021 these were:
- €100,000 per annum: Germany; the Netherlands; Luxembourg; £70,000 for the UK when still part of the EU VAT regime until 31 December 2020.
- For all other EU member states it was €35,000 per annum or local currency equivalent.
These thresholds are now withdrawn. VAT must be charged at the rate of the country of residence of the customer. However, as seen above, the OSS return simplifies this reporting of all of these sales.
OSS, the UK and other non-EU sellers
OSS is available to any non-EU seller resident, including those from the UK following the ending of the Brexit transition period after 31 December 2020. Non-EU sellers simply pick any member state and register under a special non-Union OSS scheme which is similar.
OSS invoicing obligations
In further good news, OSS invoicing obligations are limited, both for the Union and non-Union schemes. Sellers do not have to produce B2C invoices for their sales.
In the case of an audit for the Intermediary, they may use the new SAF OSS schema which standardises the XML report to be supplied.
