So you’ve been excluded from OSS – what happens next?  

The One-Stop-Shop (OSS) VAT scheme offers a simplified and convenient way to service and report all your B2C cross-border EU sales. It’s your ticket to the almost €1 trillion European e-commerce market, and makes dealing with VAT far easier by offering a simple, streamlined registration process for businesses across all 27 states of the EU.   

But if you’re selling and storing within the EU, things can go wrong if you find yourself excluded from the scheme.  

How does this happen and what can you do?  

Firstly, some background: what’s the OSS?   

Introduced by the European Union as part of a wider VAT overhaul on 1 July 2021, the OSS scheme marked a new era in managing VAT. Big online marketplaces such as Amazon and eBay became ‘deemed suppliers’, making them responsible for collecting and remitting VAT to EU tax authorities.   

Huge laws were passed globally regarding (and involving) Amazon. The Marketplace Facilitator laws, which came into effect in 2018-2020, mean that marketplaces are responsible for collecting and remitting tax on behalf of sellers (unless they stipulate differently).   

Amazon negotiated that if you, the seller, are incorporated in and selling in EU territory, then you do the tax stuff yourself – meaning you’re liable for tax compliance and penalties that might arise from tax evasion.  

 The OSS also:  

• removed distance selling thresholds  

• set a unified €10,000  threshold (only for EU companies) before needing OSS registration  

How does the OSS work for sellers, and what does it do?  

For you, using the scheme involves a single registration, and lets you report your cross-border B2C sales with a single OSS return (quarterly). With that one registration, you can trade across all 27 EU countries and making B2C cross-border sales smooth and efficient.   

For your end customers, the OSS scheme reassures them that when they buy goods online, whether are stored domestically or EU wide, the VAT rate is the same as in their home country – because VAT is charged at the rate of the country arrival.  

What OSS schemes are available?  

Broadly, there are different types of OSS:  

• Union OSS: provides a single VAT return on B2C sales for EU state members selling within the EU  

• Non-union: provides a single VAT return on B2C sales for non-EU businesses  

They operate in the same way but have different prerequisites.   

More about how the Union OSS works  

The Union OSS is intended for businesses established within the EU, and it covers:  

• Intra-EU distance sales of goods: Sales of goods from one EU Member State to consumers in another EU Member State.  

• Certain domestic supplies of goods: When goods are supplied within a single Member State, but the supplier is not established there.  

• Services supplied to consumers: Services provided to consumers in other EU Member States.  

More about how the Non-Union OSS works  

The Non-Union OSS is designed for businesses not established in the EU. It applies to services supplied to consumers in the EU where an online marketplace facilitator isn’t involved. Non-EU businesses can use the Non-Union OSS to report and pay VAT on services provided to EU consumers, without needing to register for VAT in each EU Member State.  

  Using either type of this single VAT return still means you need a VAT number for the country you’re storing in.  

 What the OSS doesn’t do  

The OSS doesn’t cover liability in the following scenarios – (this is where the local VAT number is required):  

• When you import  

• When you complete B2B sales 

• When you complete local B2C sales in a country 

3 reasons why you’ve been excluded

1. You weren’t fully tax compliant: Failure to comply with VAT regulations, such as incorrect VAT filings or late payments, can lead to exclusion from OSS – but AVASK can help with staying compliant  

2. You’re not selling OSS-covered goods/services: Certain goods and services, such as excise goods, may not be covered under OSS  

3.Your total distance sales within the EU didn’t meet the €10k threshold, meaning you’re not eligible to use the OSS  

Do you need to register?  

It’s less about whether you need to register for OSS (One-Stop Shop) and IOSS (Import One-Stop Shop), as it’s not mandatory, but there’s a strong case that you should – or at least that you could risk making trading more difficult without it.  

OSS registration makes B2C cross-border sales much more efficient, and means:  

• If yours is an EU-registered company, you’ll be required to register for OSS in your home country  

• If your business is located outside of the EU, you’ll need to nominate a host country where you’ll file OSS returns and pay VAT  

 You could also choose alternative methods instead, such as registering for VAT in each EU country where you sell to consumers – but you may find this costly in the long run. You might also find that certain marketplaces like Amazon will suspend you if you’re trading without an OSS registration. 

 When you might not need to register for OSS:  

For example, let’s say yours is a US-based business (therefore non-EU), which sells through Amazon, which collects and remits tax on your behalf: no OSS  

But if your non-EU business sells through another channel, such as your own website, and stores in EU – you need to register for OSS.  

 What does the ‘taxable place of supply for EU distance sales of goods’ mean for you?  

This will change from the country of departure to the country of delivery. So, if you’re storing goods within a European country, you must register for VAT, and you must file a VAT return for all local sales within that country.  

 4 things to do if you find you’re been excluded from the OSS scheme  

1. Wait 2 years: The ‘quarantine’ period is 8 quarters (or 2 years). You can’t re-register in that time, but you can get help with managing your VAT compliance for each country you’re registered in. 

2. Fix any issues with tax compliance: If exclusion is due to non-compliance, address the issues promptly. This might involve correcting VAT returns, paying outstanding VAT, or improving record-keeping practices.  

3. Check which other schemes you could use: If OSS is not applicable, consider using other VAT schemes such as the Non-Union OSS for non-EU businesses or the Import One-Stop-Shop (IOSS) for goods imported into the EU.  

4. Seek professional advice:  Consult with a tax advisor or VAT specialist to understand the best course of action and ensure compliance with all relevant regulations.  

FAQs about the One-Stop Shop (OSS) scheme