Launch of the One Stop Shop EU VAT return for e-commerce
From 1 July 2021, B2C sellers that dispatch their goods from a single country will no longer be required to register for foreign VAT and complete multiple VAT returns in countries where they are selling.
Instead, they can opt to complete and file a new One Stop Shop (OSS) filing alongside their regular domestic VAT return. The OSS filing will include sales by EU country, VAT % used, and the VAT due. The seller then remits the VAT due to their home VAT authority, which forwards the taxes to the appropriate countries.
The OSS filing is intended to make it simple for a seller to declare VAT due to each EU country apart from the domestic state and is instead of the current requirement which requires the seller to be VAT registered in each country once the seller has exceeded the relevant country distance selling threshold.
End of distance selling thresholds
At present, in order to reduce the burden on small sellers, the EU operates a VAT registration simplification for e-commerce, known as distance selling thresholds. The thresholds range from EUR35,000 and EUR100,000 and vary from one country to another. They are generally only available for sales from a sellers’ domestic stocks.
When the reforms come into effect, the existing ‘distance selling thresholds’ simplifications will be withdrawn and replaced by a single, pan-EU exemption threshold set at EUR10,000.
What are the implications?
The introduction of the OSS in July 2021 will enable some e-commerce sellers to close their foreign VAT registrations and complete a single quarterly return. It should be noted though that sellers who hold stocks in other EU locations will still have to remain foreign VAT registered.
The introduction of the OSS builds on the successful launch of the single VAT return for B2C digital services in 2015, referred to as the MOSS return.
Non-EU sellers can also apply to use the OSS regime, and will need to nominate a single EU state to register and file in.
The OSS filing will be a quarterly return and will be standardised across all the EU member states.
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The information was correct at time of publishing but may now be out of date.