EU July 2021 One-Stop-Shop (OSS) single EU VAT return

8 May 2020 update: the 2021 EU VAT e-commerce package is delayed, including this reform, until 1 July 2021.

From 1 July 2021, the EU member states have agreed to extend the existing Mini One-Stop-Shop (‘MOSS’) single EU VAT return for pan-EU B2C sales of e-services to online sales of all goods and services to consumers. The reform will hugely simplify the VAT compliance burden for hundreds of thousands of online sellers, building on the success of the MOSS reforms of 2015.  It is part of the EU Action Plan for VAT and other reforms.

One-Stop-Shop (OSS) VAT return

The amendment will mean e-commerce merchants of goods, selling on a distance selling basis, will no longer have to VAT register in all the states of their consumers. Instead, they may opt to complete a single One-Stop-Shop (OSS) return, declaring all sales to consumers in other member states. This is filed with their domestic VAT office, with the VAT charged on each transaction calculated at the rate of the customers’ country of residence. OSS returns will be filed on a quarterly basis.

Sellers will continue to declare VAT on sales to consumers in their own country through their domestic VAT return. This is still required to be filed in addition to the OSS. Non-EU sellers may also benefit from the OSS single filing. They are required to complete a full VAT registration in a single country of their choice – typically where they import goods into the EU. They may then file an OSS return in that country to cover distance sales across the rest of the EU.

Ending distance selling threshold rules

As the same time as the introduction of the OSS return, the EU will withdraw the distance selling VAT thresholds regime. This is a simplification that means small sellers do not immediately need to VAT register in other EU states where they have consumers under the EU VAT Directive place-of-supply rules. Instead, they can charge their own country’s VAT rate, and declare it to their own national tax authorities. Only once they pass the country of their customers’ thresholds, do they have to locally register and charge the VAT rate of the consumer’s state. The distance selling thresholds are set by the member states at either €35,000 or €100,000 per annum (local currency adjusted, if appropriate).

Foreign stocks and FBA VAT rules unchanged

Sellers holding stocks in foreign EU countries for the convenience of their non VAT registered customers, including the Fulfilment by Amazon (FBA) service, will still be required to VAT register where they are holding these stocks. This is in order to record the movement of the goods between member states prior to the eventual B2C sale.