What is VAT-OSS? Changes in VAT settlements in the EU in 2021

  • Last update: 27.03.2024
  • Published: 18.09.2020
  • Read in: 5 min

What is the VAT-OSS (One-Stop-Shop) that will be introduced in 2021 in the EU? Who will be able to use the VAT-OSS billing system? How to prepare for VAT-OSS? VAT-OSS and FBA sales and storage of Pan-EU goods. New VAT regulations for internet trade in the EU in 2021.

VAT-OSS - Changes in VAT settlements in the EU in 2021

VAT-OSS – definition

VAT-OSS or Value Added Tax – One-Stop-Shop will be the equivalent of the existing VAT-MOSS system, however, addressed to sellers of goods via the Internet. Let us remind you that VAT-MOSS concerns the sale of digital products. The VAT-OSS system will be a mechanism facilitating the settlement of VAT due in several countries, ultimately in one European Union country.

VAT-OSS and Amazon FBM

The introduction of the VAT-OSS system will be a great convenience for those who sell their goods in the FBM model. Thanks to VAT-OSS you will not have to register for VAT activities in every EU country to which you sell your goods. Instead of registering for VAT in many EU countries, it is enough to register for VAT in the country where the goods are shipped, submit VAT returns and make VAT payments in one tax office. Then the tax office on your behalf will make the appropriate VAT transfers based on VAT-OSS.

VAT-OSS and Amazon FBA

In the case of sales in the FBA model, unfortunately, there will be no such simplification. Everything consists of the place where the goods are stored, which the VAT-OSS system does not cover. When you sell your goods in the FBA model, the goods are stored in many EU countries and you are obliged to register and settle VAT (WDT/WNT) in these countries too.

VAT-OSS – changes in the scope of VAT under the directive

The main principles of the Directive, which is to be amended in 2021.

  1. Elimination of limits on mail-order sales – as a rule, you pay VAT in the destination country where the goods are shipped
  2. Sales portals will be obliged to settle VAT – if: – they act as intermediaries in the sales realized by an entity from outside the EU – they sell goods with a value below 150 EUR, which are sent to EU customers from third countries Formally, the sales platform cannot charge and settle the VAT for EU companies – here the individual companies are the taxpayers. The platform takes over the duties only for non-EU companies.
  3. Possibility (right) to settle VAT on mail-order sales in one VAT return submitted in one of the EU countries (you can choose the country where you have VAT registration).

Other, no less important, changes that result from the amendment of Directive 2006/112/EC on VAT e-commerce settlements:

  1. The directive defines a general set of rules (assumptions). EU countries are obliged to implement them. Initially, the deadline for introducing the changes was set for 1 January 2021. However, it was postponed to July 1, 2021.
  2. The rules concerning the movement of goods and sales within one country will not change (i.e. in the FBA model there will still be an obligation to register for VAT).
  3. The sales platforms will have to keep records that will allow the tax offices to inspect the sellers – the directive does not specify how detailed these records are to be – the aim of the regulations is to tighten up controls within the framework of e-commerce. However, there is no obligation to share this data with taxpayers (sellers).
  4. A regulation has been issued which specifies the templates of data that will have to be provided in the application for registration to the OSS and VAT returns. It is worth noting that the declarations will be submitted quarterly.

What is important is that you will have to register to join OSS/MOSS. Settlement through OSS/MOSS is an opportunity to make life easier for retailers. If you miss the deadline for the application, you settle, as before, the obligation of registration and VAT settlements in each country.

Tomasz Połeć Tomasz is a co-founder of Taxology and a tax advisor (license No. 12104), with 15+ years of experience in Polish and international consulting firms. Leveraging his expertise from numerous tax reviews and audits, he offers proficient tax advisory services to e-commerce companies. He specializes in advising on VAT and CIT settlements in e-commerce and logistics.