Cross-border expansion is an opportunity for online stores to significantly grow their customer base. At the same time, it creates new challenges. In addition to more complex logistics, international sales involve additional legal and tax obligations. A milestone in simplifying these issues is the VAT-OSS procedure. Learn what it is, how to use it, and what benefits it brings.

Where and how much taxes should you pay if you sell to customers in many countries? It's easy to get lost in the international tax regulations, and having your own warehouse, you are left to deal with these problems yourself. It is worth entrusting professional partners who will help you with both logistics, as well as with legal and tax issues. When using Omnipack's fulfillment services, you can count on being connected to companies like amavat. amavat’s specialists will advise you on what requirements must be met in order to send goods abroad and what solutions you can benefit from. One of those is the settlement of remote sales under the VAT-OSS procedure.

VAT-OSS makes it easier for online stores that sell in various European Union countries to meet tax requirements. The procedure introduced in July 2021 is a key component of the VAT package for e-commerce. It allows you to report and settle VAT in one EU country for all B2C transactions made in different member states. This approach significantly simplifies settlement processes, reduces administrative burdens, and improves compliance with tax regulations.

VAT-OSS also removes barriers to cross-border sales. Companies no longer have to face the limitation of foreign expansion only to selected countries – VAT-OSS covers all EU countries in which the seller conducts remote sales. For example, an online store originating from Poland and using the VAT-OSS procedure can handle sales from Poland to all individuals in all member states. Thanks to this, VAT-OSS responds to the challenges related to VAT settlement in the e-commerce sector, enabling e-commerce businesses to focus on growth and expansion throughout Europe.

VAT-OSS – what is it and how does it work?

VAT-OSS (Value Added Tax One Stop Shop) is a procedure that streamlines the VAT compliance process for online stores selling across the European Union. E-commerce businesses can report and pay VAT in their home country instead of having to register for VAT in the individual EU countries to which they target their products or services.

Who is VAT-OSS for?

VAT-OSS is available to companies offering goods or services online to consumers in various European Union countries. It covers remote transactions inside the EU and B2C services for companies headquartered in the EU. For non-EU companies, non-EU VAT-OSS refers to the supply of electronic, telecommunications, broadcasting, and certain other services to EU consumers.

How does VAT-OSS work?

Participation in the VAT-OSS procedure is voluntary. E-commerce companies can register in the VAT-OSS system in the EU country where they are based. The system enables registration in one EU country and it is this country that then manages all VAT obligations related to B2C sales throughout the EU. Companies are then obliged to submit quarterly declarations in which they describe in detail all transactions covered by the VAT-OSS procedure.

New VAT-OSS regulations

The new regulations have expanded the scope of entities that can register for VAT-OSS. The limits have been standardized at EUR 10,000 net annually or its equivalent in the country's currency. E-commerce businesses exceeding this threshold still have to pay VAT in the buyer's country, but can register for VAT-OSS in the country where they operate. There, they submit one declaration to the appropriate Tax Office, which then distributes the funds to the countries where the goods were sold to. The new rules eliminate the need to register for VAT in another EU country after exceeding the sales limit.

Qualification to the VAT-OSS system

Qualification to the VAT-OSS system requires meeting certain criteria and going through the registration process. 

Eligibility criteria for VAT-OSS

1. Sales threshold → Companies whose annual sales to consumers in other EU countries exceed the threshold of EUR 10,000 net should register in VAT-OSS. Companies at an earlier stage, before they meet the threshold above, can also register for VAT-OSS, but this requires additional documentation.

2. Place of business → To benefit from VAT-OSS, companies must be registered for VAT in the EU country where they are based.

3. Availability for non-EU companies → Non-EU companies can also use VAT-OSS. They must have a physical presence in an EU country or use a tax representative.

VAT-OSS registration procedure and submission of VAT-OSS declarations

In order to successfully register and submit a declaration in the VAT-OSS system, e-commerce business owners need to take several steps.

Registration for VAT-OSS – what procedures must be followed?

1. Access to the One Stop Shop portal → Companies registered for VAT in their home country can register for VAT-OSS using the One Stop Shop portal of their home country.

2. VIU-R form → Registration for VAT-OSS can be completed using the VIU-R form. However, please note that registration only becomes effective from the first day of the quarter following the quarter in which the application was submitted. 

3. Registration by proxy - UPL-1 and PPS-1 forms → Registration for VAT-OSS by proxy is possible, but it is necessary to provide a qualified electronic signature and submit the UPL-1 form for signing and submitting declarations and the PPS-1 form for authorization.

4. Registration deadline → Registration for VAT-OSS must be made by the 10th day of the month following the month in which the sales threshold of EUR 10,000 was exceeded or which was the first to be reported to the VAT-OSS procedure. You cannot register for VAT-OSS retroactively. The registration process takes 2-5 business days from the moment of submitting the application.

VAT-OSS declarations – how to submit a quarterly declaration?

1. Quarterly VAT-OSS declarations → After registering for VAT-OSS, entrepreneurs are obliged to submit quarterly VAT-OSS declarations via the One Stop Shop portal of their home country. These declarations should include information on sales, VAT rates, and the amount of VAT due. Payment is made by one collective transfer in EUR.

2. VIU-DO declaration → Another declaration that must be submitted quarterly is the VIU-DO declaration. It must include all transactions covered by the VAT-OSS procedure. This document is of key importance – on its basis, VAT is settled for sales in all EU countries.

3. Deadlines → The end of the month after the end of the quarter is the deadline by which declarations must be submitted under the VAT-OSS procedure. Retrospective or corrective declarations cannot be submitted.

Key benefits of VAT-OSS for entrepreneurs

VAT-OSS brings significant benefits to e-commerce businesses throughout Europe. It allows entrepreneurs to focus on business growth and foreign expansion and thus minimizes the associated costs and administrative burdens.

Simpler VAT reporting → You no longer need to submit separate VAT declarations in each country where your products were sold to. Instead, online stores can use one quarterly VAT-OSS declaration. This process significantly saves time and costs because it simplifies the management of VAT obligations. 

Reduced administrative burden → There’s no need to register for VAT multiple times in various EU countries anymore. The VAT-OSS procedure eliminates this obligation, thanks to which e-commerce entrepreneurs have fewer administrative obligations and incur lower costs. Centralization of settlement processes also translates into greater operational efficiency.

Greater efficiency in VAT management → Clarity of procedures and applicable deadlines increases the efficiency of VAT liability management and enables e-commerce businesses to plan their activities better. The VAT-OSS procedure also allows for faster response to changes in VAT regulations, which is particularly important in the extremely dynamic world of e-commerce.

VAT-OSS makes cross-border sales much easier

VAT-OSS is a milestone in simplifying VAT settlement procedures for e-commerce businesses that conduct cross-border sales in various European countries. Centralization of the process reduces the administrative burden and allows entrepreneurs to focus on business growth. It is worth taking advantage of the opportunity to register for VAT-OSS. This will not only simplify the management of VAT liabilities but also improve operational efficiency while meeting legal requirements. 

All Omnipack merchants, i.e. e-commerce business owners using our fulfillment services, have access to an experienced partner in VAT-OSS registration. amavat is our trusted partner and first aid in tax services for e-commerce.