VAT in the Digital Age – Union One Stop Shop (OSS) Expansion

Entering into force on 1 January 2025, the EU Commission’s VAT in the Digital Age (ViDA) proposals have been introduced in an effort to modernize VAT across the EU.  One pillar of ViDA is the “single VAT registration,” which would reduce compliance costs for businesses. The Commission proposes to achieve this by expanding the Union one-stop-shop (OSS) scheme.

Expanding the Union OSS Scheme

Introduced in July 2021, the Union OSS scheme is an optional single VAT registration for businesses selling cross-border to final consumers (B2C) in the EU. OSS allows businesses to declare and remit VAT due on all their cross-border sales via one Member State administration and in one language. The OSS schemes are available to taxable persons established in the EU and outside the EU. Taxable persons who are established in the EU can use the Union scheme, whereas taxable persons who are not established in the EU have the option of using the non-Union or the Union scheme.

The scope of OSS has some limitations, such as the requirement for businesses to register for VAT in a Member State when simply moving their stock there, to be sold directly to consumers later. The Commission proposes to expand OSS by bringing more supplies in scope, to simplify registration requirements and ease administrative burdens.

From 1 January 2025, the following supplies can be reported through OSS when supplied B2C:

• Domestic supplies of goods in EU Member States,
• Supplies of goods with installation or assembly,
•  Supplies of goods on board ships, aircraft and trains,
• Supplies of gas, electricity, heating and cooling;

Further, taxable dealers that operate under the margin scheme for second-hand goods can opt to register under OSS for their cross-border supplies. The addition of these supplies and services effectively extends OSS to all those supplied within a Member State.

Limiting Union OSS Expansion

The Commission’s public consultation on the ViDA proposals yielded varying viewpoints – particularly on OSS expansion. Stakeholders agreed that OSS has generally minimized the need to maintain multiple VAT registrations across Member States. Stakeholders nevertheless reported that the functionality of OSS has issues, such as Member States requiring businesses to include OSS transactions in domestic VAT returns, which leads to additional reporting complexities. The most widespread agreement was for OSS to cover all B2C supplies of goods and services by non-established suppliers. A smaller group of stakeholders wanted OSS to extend to intra-community supplies and acquisitions of goods, and to B2B supplies of goods and services, when coupled with a deduction mechanism.

The consultation highlights stakeholders’ opinions on their experience with OSS and the options that were available to the Commission to further scale up the OSS expansion proposals in the ViDA package. Each of these options would contribute to the goal of minimizing VAT registrations and simplifying VAT compliance through an expanded and more uniform OSS system; however, there was a lack of uniformity amongst stakeholders based on their various businesses, economic positions, technical capabilities, and other wide-ranging factors.

Looking Ahead

Through the public consultation, stakeholders indicated a desire for even more OSS expansion than what was ultimately decided in the proposals – more B2C supplies, B2B supplies, and additional functionality of the scheme. The features of the proposed OSS expansion to bring more B2C supplies, particularly domestic supplies, within the purview of OSS will further simply registration and reporting requirements.

However, these additions are moderate in comparison to the options presented by the Commission during the public consultation. The reasoning behind these limitations may stem from the potential technical and administrative difficulties Member States and businesses face in implementing and utilizing the OSS system. Including each of the new B2C and B2B supplies, and additional features stakeholders asked for, could potentially overburden administrators and bog down technical systems – an outlook that could explain the limited step forward the Commission has taken for OSS at this time.

The provisions may expand further to fill the gaps as more companies utilize ViDA and stakeholders can analyze the successes and failures within the system.