The VAT-OSS procedure is due to come into force as early as 1 July 2020. It is intended to facilitate mail order sales of goods between EU countries. Will it really make it possible to remove the obligation to register for VAT purposes in other EU countries?
What is VAT-OSS?
VAT-OSS (One-Stop-Shop) is a procedure that makes it possible to account for online mail order sales to other EU countries in a single combined declaration.
In practice, a company carrying out mail order sales to other EU countries, once it exceeds the sales threshold appropriate for the destination country, is required to register for VAT in that country. It is also obliged to submit VAT declarations and make timely payments to the tax authorities in that country. With the VAT-OSS procedure, sellers will be able to settle VAT by submitting a single declaration (e.g. to the Polish office). It does not matter if you sell to several EU countries.
At the same time, with the introduction of the VAT-OSS procedure from 1 July 2021, the thresholds for mail order sales to EU countries are due to change. From 1 July 2021 onwards, the country-specific thresholds will be unified and will amount to €10,000 (mail order sales in a specific country in a calendar year) for all member states.
Please note that this procedure is implemented only between EU countries and will not apply to such non-EU countries as, for example, the UK or Switzerland.
What transactions can be settled under the VAT-OSS procedure?
The VAT-OSS procedure applies to the reporting of mail order sales from one EU country to another for private individuals (other than VAT taxpayers). As a result, if you sell goods on Amazon under:
- Amazon FBM – you are not required to register for VAT in the countries to which you send your goods. In principle, all sales can be settled under the VAT-OSS procedure. It is sufficient to submit a local declaration in the country where the goods are stored.
- Amazon FBA – you are required to register for VAT in the countries where Amazon stores goods. The VAT-OSS procedure applies only to mail order sales between EU countries. Movements of goods between Amazon warehouses, local (domestic) sales and sales to other VAT taxpayers, among other things, must continue to be reported in foreign VAT declarations. However, with the VAT-OSS procedure, it will no longer be necessary to register for VAT in other countries where Amazon does not store goods (e.g. Austria, Belgium).
VAT-OSS – how do you use it?
In order to use the VAT-OSS procedure, it is necessary to submit a relevant request to the tax office in any country of the European Union.
Settlements under the VAT-OSS procedure involve submitting a single quarterly tax return for all mail order sales within the European Union.
The declaration includes:
- all consuming Member States (receipt of goods),
- VAT rates applied,
- the taxable amount for a given VAT rate,
- VAT amount.
Aggregate payments of VAT due will be made to the account of the tax office to which the return is submitted.
The legislative process regarding the VAT-OSS regulations is still in progress (the draft law is currently being discussed in the Polish Sejm).