VAT One-Stop Shop : a guide for e-sellers

Are you an e-business owner but not a VAT expert? Do you find reporting obligations daunting? The VAT One-Stop Shop is a valuable tool for e-sellers marketing their products or services within the European Union, as it considerably simplifies EU-wide VAT management.

However, if you don’t want to jeopardize your e-commerce business, it’s best to understand the basics, and get support if necessary.
Below, you’ll find the key points you need to understand to find out when you, as a distance e-seller , are affected, and by which VAT One-Stop Shop .

What is a One Stop Shop in VAT?

A European creation

VAT One-Stop Shops represent a revolution in the history of VAT: prior to their introduction, EU member states collected the VAT due on their own tax territory, forcing each operator to identify himself for VAT purposes in multiple countries of operation. Today, thanks to one-stop shops, one member state can collect VAT on behalf of another member state of the European Union (EU).

A powerful tax mechanism

Some member states were very reluctant to accept this mechanism. However, after just a few months, experience proved them wrong: the system was working properly. Some member states were even surprised by the increase in their VAT revenues. The system helps to reduce VAT fraud, with a clear reduction in VAT gaps in Europe.

The One Stop Shop means that companies no longer need to register for VAT purposes in each of the Member States where their operations are subject to VAT.

Digital portals

A “One Stop Shop” is an IT system set up by a Member State, providing a single electronic contact point for the identification, declaration and payment of VAT throughout the European Union (“One Stop Shop”).

Which One Stop Shop for which operations in Europe?

One-stop-shops concern both operators established within the European Union, and foreign operators. To get a clearer picture, it’s important to refer to the physical flow of goods, and not to the nationality of e-sellers.

We talk about the VAT One Stop Shop, but there are actually 3 One Stop Shops called OSS-EU, IOSS and OSS non-EU schemes. OSS stands for “One-Stop Shop”. One-Stop Shop and generally refers to the^1st VAT one-stop shop, the OSS-EU.

E-sellers are concerned by OSS-EU and IOSS.

The “OSS UE” Scheme

Commonly known as the One-Stop Shop or OSS, it is intended for intra-Community distance selling from a stock of goods located in Member State 1 to private individuals in Member State 2, whatever the nationality of the e-tailer.
It enables European companies, or companies with a warehouse in a Member State, to declare and pay VAT on sales of goods, regardless of the value of the goods sold.
The use of OSS-EU is mandatory for companies exceeding the annual threshold of €10,000 intra-Community distance sales – it is optional, but recommended below this threshold, so you won’t have to monitor and/or forget that the threshold has been exceeded, and no longer guarantee the conformity of operations.

“IOSS” Import One-Stop Shop

Guichet unique IOSS (Import One-Stop Shop) is designed for distance selling of imported goods, i.e. for shipments of goods delivered from non-EU countries directly to European consumers.

IOSS is accessible to all e-sellers. It enables companies selling goods in the European Union, and whose goods are sent directly to customers by a supplier established in a third country, to declare and pay VAT on sales of goods from a third country. value under €150 (and only those).

Dropshipping operations – direct delivery from a supplier usually located outside the European Union to individual customers within the EU – can also be processed under the IOSS system.

The “non-EU OSS” One-Stop Shop

The non-EU OSS One-Stop Shop is more specific. It is reserved for companies based outside the European Union that sell services to European individuals.

One-stop shops, marketplaces and intermediaries

The various One-Stop Shops will also be used by intermediaries who, in certain cases, will be liable to pay VAT on behalf of e-sellers. The so-called facilitating platforms will be responsible for collecting and reversing VAT in the following situations:

• For all e-sellers : the facilitating marketplace will be liable for VAT on distance sales of imported goods;
• Only for e-merchants based outside the European Union: the marketplace will also be liable for VAT on intra-EU distance sales.

Frequently asked questions about VAT One-Stop Shops

Do I have to register to several One Stop Shops in the same Member State?

Yes. As you can see, there are in fact three VAT One-Stop Shops: OSS-EU, IOSS and OSS-non-EU. Choose the plan(s) best suited to your activity. You can register at several One-Stop Shops at the same time, but this requires separate registrations and procedures.

Do I have to register for One-Stop Shops in several states?

Each member state provides OSS-EU, IOSS and OSS-non-EU One Stop Shops, providing a single electronic point of contact forVAT identification, declaration and payment for all EU member states.

These One-Stop Shops are available:

• companies established on its territory,
• companies established in non-EU countries but with a storage platform in their own country.

A company may not register in several member states.

How is the annual threshold of 10,000 euros determined?

A sales threshold of €10,000 excl. tax/year applies to OSS-EU: companies exceeding the threshold of €10,000 excl. tax/year in intra-Community distance sales are obliged to use OSS-UE. Below this threshold, they can also do so, but without obligation.
The €10,000 excl. tax threshold does not apply to IOSS.

The €10,000 excl. tax threshold is determined by taking into account all e-commerce operations carried out by your business in the European Union. This means that it’s the total of your operations within the European Union that matters: if you have sales of less than €10,000 in three member states, but total sales of more than €10,000, you can use the one-stop shop.

Please note: The OSS-EU one-stop shop does not, however, allow you to declare all your e-commerce transactions, but only intra-Community distance sales of goods to private individuals. For example, the One-Stop Shop cannot be used to declare local sales (from the e-merchant’s country of storage to a private individual in that same Member State).

• In our article on One-Stop Shop VAT reform & e-commerce 2021, we give you details of the transactions you can’t declare.

The One-Stop VAT Shop, a simplification for e-traders?

The VAT One-Stop Shop means you don’t have to register in every member state where you owe VAT. For example, registering with the “One-Stop Shop” in France enables you to file a single electronic VAT return and make a single VAT payment on all your distance selling in all EU member states.

However, managing VAT through the One-Stop Shop often raises complex issues, and the risk of error can result in very costly adjustments. OSS-EU, IOSS, OSS-non-EU: the three One-Stop Shops have their own specificities and pitfalls . That’s why it’s advisable to enlist the help of a specialist.

You can also visit all our articles on the VAT One-stop shops.

• Need practical examples? Read our article VAT One-Stop Shop & e-shops: 5 mistakes to avoid