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Make use of the One Stop Shop to avoid having to register VAT per country
Foreign VAT will have to be charged by the entrepreneur to the consumer (B2C) according to the VAT rules of the country where the consumer is located. Instead of reporting in every EU country where the consumer is located, it is possible for the supplier to make use of the One Stop Shop (OSS) scheme. The supplier needs to register in a single EU country and can use this opportunity to account for VAT in all EU countries where the consumers are located. This is a major advantage as it significantly reduces administration costs.
There are three variants of the OSS available: 1. The Union scheme 2. The non-Union scheme and 3. The Import Scheme (IOSS) for distance sales under €150. As an entrepreneur outside the EU, it is also possible to make use of the OSS. In principle, the choice of country is free, but if the company has a permanent establishment in the EU, the OSS must be applied for in the country in which the permanent establishment is located. For the non-EU entrepreneur, it may be more advantageous not to register for the OSS if the entrepreneur expects to incur costs on which foreign VAT is charged to him.
The services that qualify for the OSS are: digital services, services that are taxed based on the legislation of the country of the consumers and services that take place in that country. Examples are intra-community distance sales (sales to consumers where the goods are sent from one EU Member State to another) and online services (such as subscription-based platforms).
For EU entrepreneurs, there is a cumulative threshold of €10,000 per year; one entrepreneur meets this threshold if, for example, €5,000 in digital services and €5,000 in intra-Community distance sales have been converted.
There is no threshold for non-EU entrepreneurs; they can always apply for the OSS. If, for example, sales are made from an EU country via a permanent establishment, the €10,000 threshold must again be met and may not be included in the non-EU company’s OSS declaration.
Would you like to make use of the OSS, then TaxAble can assist you! We can assist with amongst others:
- Registration for the OSS with the Dutch tax authorities;
- Making quarterly reports for the VAT;
- Submitting the quarterly reports for the VAT;
- Take over complete correspondence with the tax authorities.
