The EU VAT e-Commerce Package and OSS: Your Questions Answered

We hosted a webinar about the upcoming EU VAT e-commerce package with our VAT team.

Topics included the One Stop Shop (OSS), Import One Stop Shop (IOSS) and the new VAT obligations for sellers and marketplaces that will impact your business.

Although our expert team answered plenty of questions, they didn’t have time for everyone. Here’s a helpful summary.

One Stop Shop (OSS)

If a business is registered for OSS from outside the EU and aren’t using an intermediary, will they need to place a bond to cover future OSS VAT payments?

Some individual Member States require such taxpayers to appoint fiscal representatives for Union OSS. This normally leads to a bank guarantee for either the fiscal representative or the tax authority. The requirement for an intermediary is for IOSS only.

When goods are shipped to an EU customer from outside of the EU, how does EU customs know that the VAT has been accounted for under OSS, and that they or the shipping agent don’t need to raise a VAT invoice to the customer?

The VAT is due under IOSS. The seller will have an IOSS reference number (credentials) that must be reported as part of the customs declaration. Customs will use this to reconcile the VAT reported at customs to the VAT accounted for on the VAT return. There is no requirement to raise a VAT invoice.

What if a company has both B2C and B2B transactions in a country? Do we need to keep VAT registration for B2B transactions? Can we keep both of our B2B and B2C sales under VAT return, or should we move B2C under OSS?

B2B transactions require VAT registrations according to the current rules. For B2C, the practical effect of the €10,000 threshold is that the vast majority of sellers will need VAT numbers in every Member State where they sell B2C or use the OSS.

If, because of B2B transactions, a company has all the required registrations also for B2C then they could use these registrations.

OSS is (currently) optional but it’s necessary to carry out a review of current supply chains to understand how VAT will apply after the EU e-commerce VAT package comes into effect.

If a company sells products into the EU where the products come from the US, UK or within the EU, would it need to register for both IOSS and OSS?

Goods sold within the EU where the delivery starts in the EU are eligible for OSS. Goods sold within the EU where the delivery starts in a third country are eligible for IOSS. Therefore, it would be necessary to register for both (although it’s not currently compulsory).

If a company isn’t registered in any EU country and begins to use IOSS will they need to set up a business and register for VAT in one EU country? Or if not, what is the benefit of using IOSS instead of creating a company in an EU country?

There is no requirement to set up an EU business to use any of the OSS schemes. There is no need to have a normal VAT registration in the EU to apply for IOSS or a non-Union OSS VAT registration. It’s necessary to have a normal VAT registration in place in a Member State to use OSS.

The value of goods up to and including €150

If products are a mixture of value above and below €150 would OSS cover all of these sales?

OSS applies to all sales where delivery starts within the EU, regardless of the intrinsic value. If goods are from outside the EU, IOSS will only apply to goods up to the value of €150.

Is the €150 value for a single item or total transaction value? What if goods are invoiced separately and delivered together?

The value is based on the actual consignment shipped. A consignment is defined as goods packed together and dispatched simultaneously by the same supplier or underlying supplier to the same consignee and covered by the same transport contract.

The explanatory notes say:

Consequently, goods dispatched by the same consignor to the same consignee that were ordered and shipped separately, even if arriving on the same day but as separate parcels to the postal operator or the express carrier of destination, should be considered as separate consignments, unless there is a reasonable suspicion that the consignment was split intentionally in order to avoid the payment of customs duty. In the same manner, goods ordered separately by the same person, but dispatched together, would be considered as a single consignment.

In the case that the goods are ordered via an electronic interface, the latter generally does not, at the time of supply, dispose of the information on whether the underlying supplier dispatches the goods in one consignment or multiple consignments.

The electronic interface is thus required to make certain reasonable assumptions, e.g. when multiple goods are ordered by the same customer at the same time and from the same supplier, the electronic interface should presume that the goods will form one single consignment. When several distinct orders are placed by the same customer on the same day, the electronic interface should likewise presume that the goods belonging to the different orders will form separate consignments.

More details can be found in the customs guidance (section 1.3.2 and section 3.1.4)