What are OSS, MOSS, and IOSS?

OSS, MOSS, and IOSS have shaped how companies making cross-border business-to-customer (B2C) sales manage their VAT compliance. But what do these three schemes entail? Understanding them can help you simplify your VAT compliance when selling across the European Union (EU).  

• Learn about simplification schemes 
• Get key updates and rule changes 
• Determine which apply to your business  

OSS stands for One-Stop Shop. It’s a simplification scheme that allows B2C sellers of goods and services within the EU to charge, report, and remit VAT on their cross-border sales through a single EU VAT registration and return.  

OSS can save businesses time and lower their administrative costs because they don’t have to obtain VAT registration numbers and complete VAT return filings in each country they’re selling in — just one OSS filing alongside their usual domestic VAT return will suffice.

• OSS replaced and extended the Mini One-Stop Shop (MOSS) scheme (more on MOSS later).  
• OSS is split into two categories: 
  • Union OSS — used by EU-based businesses selling B2C goods within the EU, non-EU businesses with a warehouse or stock in the EU selling goods to EU customers, and B2C service providers such as telecoms, broadcasting, and digital services.  
  • Non-Union OSS — used by non-EU businesses providing B2C services to EU customers without having any physical presence or stock in the EU. These businesses can register for Non-Union OSS in one EU country to file quarterly VAT returns. 

Non-EU resident businesses can use the simplified OSS filing by registering as a non-union taxpayer first. This allows them to be registered with a single EU tax authority, with the ability to file quarterly OSS filings in the same way as EU ecommerce sellers. 

OSS does not apply to goods imported into the EU from outside the region. That’s what IOSS is for.

IOSS stands for Import One-Stop Shop. It’s a scheme that was introduced to simplify VAT on low-value imports of less than €150 from non-EU countries to EU consumers. Sellers only have to charge VAT to their customers at the point of sale. Because of this, buyers are not required to pay import VAT at customs if the seller uses IOSS.

Goods sold under IOSS go through a ‘green lane’ at customs. This enables a fast and streamlined release from customs and faster delivery to customers. 

Businesses registered for IOSS are assigned an IOSS number. This is a unique VAT identification number used in customs declarations to show that VAT was already collected by the seller.

To use IOSS, the company carrying out distance sales of goods from outside the EU must register in the member state where it has established its business, or, if it is established outside the EU, it can choose a single member state. There are no VAT advantages in choosing one member state over the other.

Under IOSS, a business is required to submit a single monthly VAT return to the member state where it is registered, which includes:

• Total value of sales (net of VAT) to each member state, i.e., where the customer received the goods 
• VAT amount  
• VAT rate

• VAT is collected at the point of sale and reported via a single monthly IOSS return. 
• Customers don’t have to pay VAT or customs handling fees upon delivery. 
• Customs clearance is faster. 
  

Online marketplaces making sales of imported goods may be required to collect and remit VAT on behalf of sellers under IOSS. This supports the European authorities’ aim to reduce VAT fraud.

MOSS stands for Mini One-Stop Shop. MOSS was a predecessor to OSS that applied to B2C supplies of digital services (such as streaming and software) across the EU. OSS replaced MOSS, which extended its scope to physical goods and more types of services.

• MOSS registrations were automatically migrated to the OSS scheme by most EU tax authorities. 
• Although the U.K. MOSS scheme ended, U.K. sellers can still use Non-Union OSS to comply with EU VAT rules when selling digital services to EU consumers.

One-stop shops help to simplify VAT compliance for sellers and make cross-border expansion easier. It’s important to understand which simplification scheme your business is eligible for. You can contact Avalara to find out more or discover our VAT compliance and IOSS solutions.