Who is affected by VAT-OSS?

Adam Grabiński
Adam Grabiński Updated: 21 June 2022

A business owner who is thinking about scaling their business can decide to place products on foreign markets. It is a turning point for any business. However, it creates additional challenges, such as the requirement to register for VAT in EU countries. How can you do this for the lowest cost?

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VAT and VAT-OSS in EU Guide

A business owner who is thinking about scaling their business can decide to place products on foreign markets. It is a turning point for any business. However, it creates additional challenges, such as the requirement to register for VAT in EU countries. How can you do this for the lowest cost?

In this article, we will talk about the easiest way to account for VAT for distance selling in the European Union.

What is VAT One Stop Shop (OSS)?

VAT OSS is an electronic portal that makes it easier to account for VAT in the member states of the European Union. It applies to all goods and services sold online in the EU.

As part of the VAT OSS procedure, business owners submit one tax return every quarter. It should take place in the country of incorporation. Thanks to it, taxes due to all countries to which the business owner sells their products are paid at one time and it is not necessary to register in tax offices in every country.

It is voluntary to use this simplified procedure, but once you make that decision, it applies to all countries in which you sell your products. It means that you cannot use VAT OSS for some countries and account for VAT as a registered taxpayer in other countries.

VAT OSS is an extended version and the successor of VAT MOSS, which applied to the online sales of electronic, telecommunications and broadcasting services to EU countries. To read more about what has changed, go here.

Apart from the Union scheme, on which we will focus today, there are two more schemes:

  • non-Union scheme (it applies to distance selling of goods or services to consumers from EU member states when the seller is not established in the EU)
  • import/IOSS scheme (it applies to distance selling of imported goods or shipment from third countries when a single transaction does not exceed EUR 150)

Who is affected by VAT OSS?

At the beginning, we would like to stress once again that it is not mandatory to use One Stop Shop. In this context, being ‘affected’ needs to be understood as ‘being entitled to use’.

VAT OSS affects business owners who sell their goods (in the B2C model) to consumers from other member states of the European Union. It applies when the total value of all transactions in the EU exceeds EUR 10,000 (per year).

Let’s assume that you carry on a business in Poland and you are a registered taxpayer in France. You send goods worth over EUR 10,000 from Poland to France. One package worth EUR 10 is sent to Belgium. Despite the fact that it is a negligible transaction, you need to register as a taxpayer in Belgium or register for VAT OSS because you exceeded the limit of VAT-free sales in the EU.

As a result, VAT OSS is a great solution for business owners planning to expand their business and enter foreign markets. This procedure makes it possible to account for the VAT due to all member states using only one tax return.

NOTE! If goods are warehoused and dispatched from other EU member states, the business owner is subject to VAT separately in each of these countries, which means that the business owner is obliged to register for and pay VAT. In this case, VAT OSS is not enough.

To sum up, the Union scheme can be used by business owners who:

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