Exporting to EU: Five standard terms every desi seller should know

Summary-

  • OSS replaced and extended the scope of MOSS.
  • IOSS is the online portal that sellers have to access to report VAT.
  • IOSS intermediaries help non-EU sellers to get registered and benefit from IOSS.
  • This blog will help you understand the meanings of EU VAT jargon.

It has been three months since the EU VAT reforms. The sellers across the globe have started getting their registration and selling into the world's biggest trading bloc. Indian sellers aren’t behind. But amidst all the information overload that has come crashing down since its launch, everyone is communicating with jargon. So if the EU VAT jargon confuses you, this is a good read for you. Here is a list of acronyms that you need to know to catch up with the rest of the sellers.

1. MOSS

MOSS stands for Mini One Stop Shop. This digital services scheme was earlier active. They converted it into OSS on 1st July 2021. It was active from 2015. The sellers were allowed to opt for one VAT registration under this scheme. However, it applied only to the following.

  • Cross border communication
  • Broadcasting (radio and television)
  • Digital Services

Online teaching through distance learning platforms, online gaming, supply of software, hosting websites, database access and downloading of music, apps etc., was included in this industry and therefore was included under this scheme earlier.

Although OSS has replaced the scheme, one can still amend the VAT MOSS returns until 31st December 2021 and change the registration information until 31st December 2021.

2. OSS

OSS stands for One-Stop-Shop, which replaces the old MOSS scheme by extending its scope and removing all the threshold limits.

According to this scheme, transactions to any EU member state require only one EU VAT return and registration for low-value products.

This change will allow B2C transactions without filing separate returns for every member state they transact with. Instead, just one return and OSS will be sufficient.

The OSS further can be divided into two categories.

  • Union OSS

Union OSS applies to EU-based sellers to supply goods and services to EU customers and non-EU based sellers to supply goods to EU-based customers.

  • Non-Union OSS

The Non- Union OSS applies to Non- EU based sellers supplying services to EU based customers.

To use the OSS scheme, non-EU based sellers have to get themselves registered as non-union taxpayers first.

3. IOSS

IOSS, or the import one-stop-shop, is the online portal that the sellers can access to file returns and complete compliance with the OSS.

  • All the transactions below €150 will be exempt from import VAT; however, the sellers will require to report these with the help of IOSS.
  • Non- EU sellers need to get registered for IOSS under any member states with the help of IOSS intermediaries to use this scheme.

Who requires to get registered for IOSS?

Any non-EU person, company, or business selling low-value goods B2C (Business to Consumer) or otherwise to any of the EU member states, or someone who wants to use IOSS needs to get registered under the scheme. For example, if you are an independent seller of small low-value products and have customers in any of the member states, you would have to pay and report VAT, and for that, you would require to get yourself registered under it. You should find an EU resident registered intermediary, like Avalara, to represent you for VAT purposes. This intermediary shares the responsibility of reporting that is return submission and payment of VAT. In simple words, the amount of VAT and compliance of returns becomes the intermediary’s joint responsibility and that of the person who appointed them. Member states can try to acquire VAT from the intermediary as well as the supplier.

A marketplace that allows multiple sellers to sell goods to any of the EU member states will require to get itself registered, too. If you host a marketplace, you enable independent sellers to sell across the globe, taking up the responsibility of VAT reporting and payment. If you are an independent seller selling B2C via a marketplace, you don't need to worry about getting a separate registration since your marketplace is taking care of it.

Indian sellers willing to sell low-value shipments to the EU require the help of an IOSS intermediary, like Avalara, to get registered under the scheme. The intermediary shares the responsibility of reporting and payment, along with the seller. If you are looking for ways of getting started with the IOSS scheme, we can help you. We keep posting regularly about changing tax rules related to local as well as international taxes. Our tax automation suites are helping organisations of all sizes in keeping up with compliance. Get in touch with one of our executives today. 

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