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What is VAT-OSS?

27 December 2021

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What is VAT-OSS From 1 July 2021, the VAT-OSS procedure comes into force, which aims to facilitate the distance selling of goods between European Union countries.

VAT-OSS – how to use it

VAT-OSS, or Value Added Tax, is an extension of the VAT-MOSS procedure. The procedure consists in simplified VAT settlement for entrepreneurs selling e.g. digital goods and services via the internet. VAT-MOSS is an acronym derived from the name of the Mini One Stop Shop procedure. In other words, it is a one-stop shop procedure.

The introduction of the VAT-MOSS procedure was connected with changing the rules on taxation of online services such as telecommunications, broadcasting and electronic services for natural persons who are not VAT payers. These services were taxed in the country of residence of the recipients of the services. In order to reduce the obligation to register for VAT in individual countries, it was decided to introduce a simplified procedure – VAT MOSS.

VAT-OSS – facilitation of VAT settlements

VAT-OSS (One-Stop-Shop) is a procedure that makes it possible to settle Internet sales by dispatch to other European Union countries under one collective declaration.

With the introduction of the VAT-OSS procedure as of 1 July 2021, the thresholds for distance selling to EU countries have been changed. Instead of separate thresholds in individual countries, a single limit of EUR 10,000 has been introduced for the entire European Union. This limit should be counted as the total value of shipments to other EU countries.

VAT OSS declaration

Is VAT-OSS mandatory. Quarterly dispatch declaration for foreign sales within the European Union under the OSS procedure, which summarises the value of VAT due for each country of supply.

VAT-OSS procedure. How it works. All foreign sales to EU countries are taken into account. Transactions with VAT charged at the rate of the destination country are included. The report groups each sale between two EU countries with a breakdown for each VAT rate applied to the sale.

Application of the OSS procedure

The EU VAT OSS scheme applies from the first day of the calendar quarter following the quarter of notification of the intention to use this scheme. However, where the first supply of goods or services to be subject to the EU VAT OSS takes place before that date, the procedure shall apply from the date of such supply.

VAT OSS – what is it?

The OSS is an electronic system for which registration is voluntary. It applies to vendors who provide services or sell goods to private individuals. If they exceed the limit of €10,000, they can account for foreign VAT without registering in the country where the limit is reached. Registration takes place in the Member State of identification, i.e. the country in which:

the VAT taxpayers seat of economic activity is located;
the fixed establishment of the taxable person (if the establishment is outside the EU) – if the taxable person has more than one such establishment, he chooses one country to register in;
the dispatch or transport of the goods begins.

Using the OSS, the vendor will pay tax in any Member State of consumption. The whole procedure will be in the language of the vendor, in cooperation with the administration of the Member State of identification. This is a major simplification and a less costly solution than having to register abroad.