IOSS, MOSS, OSS: what does it all mean?

Avalara Jul 16, 2021

Within the VAT reforms which came into effect on July 1, there are a group of acronyms that are commonly used and often not well understood: IOSS, OSS and MOSS.

These three terms will form the way your business runs long-term, as the new rules place legal requirements on the way VAT is collected, declared and paid.

We've put together a helpful list to break down the jargon and help you navigate the overhaul of ecommerce EU VAT on July 1.

What does OSS mean?

First on the list is 'OSS', the three letters that make up all three acronyms. OSS is probably the most important one to understand before diving into the rest, as it forms the basis of the VAT reform dictionary.

OSS means One-Stop Shop, which is a single EU VAT return, including the withdrawal of distance selling thresholds.

This change is called a One-Stop Shop, or OSS, because B2C sellers will no longer be required to complete complicated VAT filings in each country they are selling in, just one OSS filing alongside their usual domestic VAT return that includes any other relevant transaction that cannot be declared under the special OSS scheme (such as holding and moving stocks across EU).

Key facts about OSS:

One-Stop Shop (OSS), replaces and extends the scope of the current MOSS scheme, which we explain later on.
The OSS is therefore split into two categories:
- Union OSS
- Non-Union OSS
The differences between the two are the types of transactions covered and who can access the scheme.
The Union-OSS is meant for:
- EU-based sellers, for goods shipped within the EU and all supplies of services to customers in the EU
- Sellers based outside the EU, only for goods shipped within the EU
The Non-Union OSS is reserved for:
- Sellers based outside the EU, for all supplies of services provided to customers in the EU

What do you need to remember:

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

What does IOSS mean?

IOSS stands for Import One-Stop Shop. This relates to the online portal sellers have access to post-July 1 2021, to comply with the new VAT ecommerce obligations.

Now, any consignment of goods valued less than €150 which is imported from outside the EU and shipped directly to EU customers will benefit from the exemption on the Import VAT, and sellers will only have to charge VAT to their customers at the point of sale (during the check-out process).

EU sellers will be able to report such transactions within the IOSS return in their home country, instead of needing to register in multiple EU locations. Non-EU sellers will only need to register for IOSS in a single EU state to be able to declare VAT on such sales.

Key facts about IOSS:

IOSS doesn’t just make it easier for you, the seller, but for your customers too, because they’re only charged once at point of sale. This avoids unexpected costs when the goods are delivered, because the goods go through a green channel at Customs which allows a fast and streamlined release that permits a quick delivery to the final customers.

What do you need to remember:

As of July 1, the VAT exemption on imported goods with a value under €22 has been removed, so all goods imported to the EU will be subject to Import VAT when they arrive in the EU. And here lies the convenience of IOSS, as under this regime the Import VAT is not charged if the consignment value is below €150.

What does MOSS mean?

MOSS means Mini One-Stop Shop, an optional digital services scheme that has been converted into OSS on July 1, 2021. The MOSS scheme has been running since 2015 and originally allowed sellers to account for VAT in one country, rather than multiple EU countries as standard.

However, only certain types of services were eligible for the scheme, applying to sellers in the following industries:

Cross-border telecommunication
Television and radio broadcasting
Digital services

These industries included services such as website hosting, software supplies, database access, downloading of apps or music, online gaming and online teaching through a distance learning platform.

Key facts about MOSS:

Since the MOSS scheme has been converted into OSS, many countries are automatically converting the MOSS registrations of the sellers into OSS registrations, allowing therefore a smooth transition between the two systems.

With reference to the UK MOSS, it was withdrawn on January 1, 2021 after Brexit. However, the guidance still applies to sales made on or before December 31, 2020.

What do you need to remember:

The UK VAT MOSS system can still be used to do the following:

Amend VAT MOSS returns until the December 31, 2021
Correct your registration information until December 31, 2024

Essentially, One-Stop Shops are there to simplify the process for online sellers, and it's important to understand IOSS, OSS and MOSS before deciding which applies to your circumstances and how to remain compliant throughout the process.

If you're finding the new information tricky to understand or aren't sure how the changes to VAT processes will affect your business, we can help you. Get in touch with our experts to find out how.

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Europe EU Ecommerce Package (2021) VAT

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.

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