IOSS AND OSS VAT Solutions for E-Commerce sellers

Introduction

The European Union (EU) has introduced new rules to the value added tax (VAT) system that will affect e-commerce sellers and marketplaces as of 1 July 2021. The low value exemption from VAT for goods imported into the EU will be abolished.

From July 2021, B2C sellers of goods will no longer be required to register for VAT in various EU countries and make VAT returns in the EU countries where they are selling. Instead, they may opt to for OSS (One Stop Shop) and file one single VAT return covering all of their B2C EU sales.

The VAT on these transactions can be collected either by:

  • Import VAT collected upon importation, with the customs declarant paying the VAT and then recovering it either from the customer or the supplier.
  • The supplier registers for the “import one-stop shop” (IOSS) and collects VAT from the customer at the point of sale. If the IOSS is used, import VAT is not due at the time of importation.

IOSS regime (Import One Stop Shop)

IOSS is a new system for reporting and collecting VAT on B2C sales of low-value goods imported from non-EU countries. Low value goods are goods with a value, not including separately stated transportation costs and VAT, not exceeding €150. For these purposes, the value of the product is calculated as the total of the value of all the products in a single package.

Non-EU sellers

Sellers who are non-resident in the EU may also use the OSS simplified filing. They must first register as a ‘non-Union’ taxpayer with the tax authority of any EU member state. They can then file quarterly OSS filings like any EU e-commerce seller. There is a requirement to file a regular domestic VAT return in at least one EU member state. VAT incurred on imports may be declared in the OSS, too.

Union Scheme (OSS) and Non-Union Scheme (OSS)

There are two OSS Schemes that can be used as illustrated below:

Non-EU established taxable person/supplier EU established taxable person/supplier
Supplies of services to consumers (B2C) Non-Union scheme (OSS) Union scheme (OSS)
Distance sales of goods within the EU Union scheme (OSS) Union scheme (OSS)
Domestic supplies Of GOODS by DEEMED SUPPLIERS Union scheme (OSS) Union Scheme (OSS)

The Union OSS

The Union One-Stop Shop (OSS) is the electronic portal businesses can use to comply with their VAT obligations on e-commerce sales within the EU to consumers from 1 July 2021.

Who can use the Union OSS and for which supplies?

1. A taxable person established in the EU (who is not a deemed supplier) can use the Union OSS for:

  • Supplies of B2C services taking place in a Member State in which he is not established;
  • Distance sales of goods within the EU.

2. A taxable person not established in the EU for:

  • Distance sales of goods within the EU .

3. An electronic interface (established in the EU or outside the EU) facilitating supplies of goods (deemed supplier) for:

  • Distance sales of goods within the EU;
  • Certain domestic supplies of goods.

How to register for the OSS?

Each EU Member State will have an online OSS portal where businesses can register from 1 April 2021 and can use for transactions made on or after 1 July 2021

The Non-Union OSS

From 1 July 2021, the non-Union scheme is extended and can be used:

  • Exclusively by (online) sellers not established in the EU.
  • For all B2C supplies of services taking place in the EU made by these non-EU online sellers.

How can we help

We can assist with:

  • Register your company with OSS or IOSS as appropriate
  • Manage your quarterly VAT / OSS / IOSS returns
  • Reduce cost of VAT compliance for e-commerce businesses
  • Assist on recruitment or creating a Cyprus establishment if needed