How One-Stop-Shop (OSS) makes international tax returns just a little bit easier1 September 2022
Marketplaces offer an excellent opportunity to sell abroad. But before you take that step, familiarize yourself with the VAT regulations of the countries you want to expand into. A hugely complex undertaking? Not anymore! Since July 2021, the One-Stop-Shop (OSS) regulation has been introduced. Whereas previously, you still had different turnover thresholds per country, this is now equalized to 10,000 euros. That makes it a lot easier to grow your business internationally through marketplaces. Still, there are some snags. So what do you need to consider?
The turnover threshold
Before the OSS regulation went into effect, there was a so-called “turnover threshold” per country. This was a fixed amount per country you exported to. If you went over this threshold in a particular country, you had to apply for a local VAT number. Fortunately, this has been simplified since July 2021. This is how it works:
- One turnover threshold for all European long-distance sales is 10,000 euros.
- If you sell from multiple European countries, you can file your return for all of them through one declaration, the OSS.
- What makes it even easier is that you don’t need a VAT number in the countries where you cross the turnover threshold. Note that if you have stock in another EU country, you still need a VAT number in that country.
- The recipient pays the VAT for the imported products. So you can no longer import products under 22 euros VAT-free.
- For the marketplaces themselves, it is now mandatory to declare when a product is sold through them but shipped from outside the EU directly to the customer. They have to collect VAT on this. This applies to shipments of up to 150 euros, even if it involves several products in one box.
The Import OSS (IOSS)
You use the OSS to declare long-distance sales to other EU countries. However, for importing products with a value under 150 euros, you use the Import OSS (IOSS). The IOSS is a portal where you can declare import VAT. Since you now also have to pay import VAT for products under 22 euros, you request an IOSS number in your portal to put on your imported products. In the IOSS, you indicate how much you have imported to the country where your customer is located. For example, suppose your customer is in Austria. Then the customer ‘imports’ your product and pays the local import tax.
How do you file a tax return?
The threshold applies to the first 10,000 euros on which you file a tax return in the Netherlands (or the country you’re based in). If you exceed that amount, you charge the tax rate of the country you send it to. This is the “destination principle” of the One Stop Shop. So suppose, in the first six months, you sell up to 10,000 euros in the Netherlands. You charge 21% on that amount. If you go over that amount and sell in France and Spain, for example, you have to charge the VAT of the customer’s country for each order. Do not forget to mention the VAT rates on the invoices of your foreign customers. This is mandatory.
Let’s clarify this with another example: you sell a product on which 21% sales tax applies in the Netherlands, and you have sold for 15,000 euros in Germany and Sweden. You exceed 10,000 euros, so you must pay 25% VAT in Sweden and 19% in Germany for each product sold above the 10k threshold. Your OSS declaration states how much turnover you have made for each rate. You then pay that VAT in the Netherlands, after which the tax instance ensures that it ends up in the correct countries.
Note that the OSS is not mandatory. You can still declare taxes in the countries you sell to if you cross the threshold. However, you have to choose one option since you cannot use the OSS in some countries and declare it separately in others. Before you decide on this, it is essential to remember that if you want to reclaim the VAT from other European countries, it is better not to declare via the OSS. You cannot reclaim the VAT from other EU countries with the OSS.
The tax return portal
Ensure you request access to the OSS through the relevant tax office. In addition, you must meet the following requirements:
- You sell from an EU country to customers (not companies) in other EU countries.
- You do not sell means of transport, assembly supplies, or margin goods.
- You take care of shipping your products yourself (FBM).
Are the products that you ship under 150 euros, do you take care of the shipping yourself, and do you not sell excise duty goods? Then you can register for the IOSS and apply for an IOSS number through the business portal of the tax office.
VAT and the big picture
Given the VAT rules, the price for your products depends entirely on what market the consumer is in, what your turnover is, and whether you use the OSS. Of course, the OSS should make it easier for sellers who arrange shipping themselves, but it is always good to get informed by experts to ensure the right VAT solution. That’s why VNDR. has partnered with Staxxer to guarantee our customers the proper VAT handling. So, want to ensure your VAT issues are neatly arranged, or need help with your OSS return? Schedule a free consultation with Staxxer.