Key takeaways
- Simplified VAT compliance: The OSS and IOSS schemes allow businesses to report and pay VAT for all EU sales through a single online portal, removing the need for multiple VAT registrations across Member States.
- OSS for intra-EU sales, IOSS for imports: OSS covers cross-border sales within the EU, while IOSS applies to low-value goods (under €150) imported from outside the EU.
- One VAT return for all EU sales: Both systems streamline VAT reporting, saving time, reducing costs, and making cross-border e-commerce easier for online sellers and marketplaces.
The OSS and IOSS schemes were introduced in 2021 by the European Union with the intention of making cross-border e-commerce easier. But just what are these VAT reporting systems and who are they for?
What is OSS?
On July 1st, 2021 the One Stop Shop (OSS) was launched. It replaced the Mini One Stop Shop (MOSS) and was created to simplify VAT obligations for companies selling goods and services to customers in EU Member States.
A retailer is required to register and pay VAT in any EU Member State where their cross-border sales exceed a certain threshold. Often this means registering for VAT in several different countries, each with its own tax laws, which can be an expensive and time-consuming process. With the One Stop Shop (OSS) scheme, VAT can be paid on sales from all EU countries to a single tax authority.
Let's say you’re an e-commerce company based in Germany and you sell goods to customers in several EU countries. One year, the annual value of those sales exceeds the VAT threshold in France, Italy, and Spain, meaning that the company now needs to register for VAT in each of those countries. Once registered, you will also be obliged to charge VAT on sales and file individual VAT returns.
Thanks to the One Stop Shop VAT system, however, this isn’t necessary, and cross-border VAT obligations can be managed under a single EU VAT registration, without any need to carefully monitor sales in the countries where you operate.
How does OSS work?
There are two programs used under the One Stop Shop: the Union OSS scheme and the non-Union OSS scheme. Union OSS is designed for taxpayers with businesses both in and outside the European Union, while non-Union OSS is intended for businesses that supply B2C goods and services within the EU but are based outside.
Once registered, businesses can use the electronic One Stop Shop VAT system to declare and pay any EU VAT due. However, sellers are still required to charge VAT at the local rate of the Member State where the goods are delivered or the services are supplied.
What is IOSS?
The Import One Stop Shop (IOSS) was also introduced on July 1st, 2021. It allows suppliers to collect, declare, and pay VAT to the tax authorities rather than the buyer in case of goods imported into the EU.
With the exception of Northern Ireland, all goods imported into the European Union from outside the EU are subject to import VAT, regardless of their value. IOSS makes it easier to declare and pay import VAT on low-value items (less than €150). Traditional import VAT regulations apply if the value of the goods exceeds €150.
If the Import One Stop Shop is used, the customer will be charged the appropriate amount of VAT. The products will be considered to have been imported VAT-exempt into the EU.
The IOSS offers similar advantages to the OSS in that you can account for the VAT on your EU sales with a single VAT return.
How does IOSS work?
When selling items to a buyer in an EU Member State, sellers who are registered in the Import One Stop Shop must charge VAT. The appropriate VAT rate is that of the EU Member State where delivery of the goods takes place.
This means that sellers and online marketplaces can collect VAT directly from the purchaser and report this via the electronic IOSS VAT system, rather than having to go through the process of waiting to check the goods through customs and pay the import VAT.
OSS and IOSS registration
OSS or IOSS registration should be completed in the EU country where the items are being transported from unless the goods are being sent from multiple EU countries. Under that scenario, suppliers can choose one of their distribution locations and register with that Member State.
Each EU Member State will have an online One Stop Shop portal where businesses can register and apply OSS regulations. All qualifying shipments made by online sellers, including those made or enabled through electronic interfaces, are covered by this single registration.
For EU suppliers, IOSS registration can be done in their Member State, whereas non-EU suppliers must register via an intermediary already established in the EU. Once registered, the Member State will assign a VAT number to the non-EU resident individual.
To find bespoke solutions for your business, optimize your VAT costs, and reach millions of new potential customers, email us at mycompliance@taxually.com and we’ll arrange a free call with one of our VAT experts.
Frequently asked questions
What is the EU One Stop Shop (OSS) scheme?
The OSS is a simplified VAT reporting system introduced by the EU in 2021. It allows businesses selling goods or services across EU borders to report and pay VAT in one EU Member State instead of registering separately in each country. This makes managing cross-border VAT compliance faster and easier.
Who can use the OSS scheme?
The OSS scheme can be used by EU and non-EU businesses that sell goods or digital services to EU consumers. It’s ideal for e-commerce companies that ship products to multiple EU countries and want to handle all VAT reporting through a single registration.
How does the OSS system work?
Once registered, businesses file a single quarterly VAT return through their chosen Member State’s online OSS portal. VAT is still charged at the rate of the customer’s country, but payment is made in one place, and the authorities distribute the tax to each EU country where sales occurred.
What is the Import One Stop Shop (IOSS)?
The IOSS is a special VAT scheme for imports of goods valued under €150 into the EU. It lets sellers and online marketplaces collect and pay VAT directly at the point of sale, avoiding delays and extra fees at customs for buyers.
Who needs to register for IOSS?
Businesses selling low-value goods to EU consumers from outside the EU can register for IOSS. Non-EU companies must appoint an intermediary established in the EU to handle IOSS registration and reporting.
What are the benefits of OSS and IOSS registration?
Using OSS and IOSS helps reduce administrative work, eliminates multiple VAT registrations, and speeds up customs clearance for imports. Both schemes make VAT compliance simpler and improve the customer experience for cross-border e-commerce.
How do I register for OSS or IOSS?
You can register through the online OSS or IOSS portal in the EU Member State where your goods are dispatched from. If your business operates from several EU countries, you can choose one country to register in for all cross-border sales.
