As of the 1st of July 2021, the massive reform of the EU VAT rules has entered into force in Europe and has introduced important changes especially for e-commerce and cross-border sales activities.
In this 10-point article, you will better understand who can take advantage of the “One Stop Shop” scheme to sell across Europe easily, how to join and what are the right declarations to fill out.
As you read the article, you will also understand how thousands of sellers manage to get these returns filled out automatically through the use of certain tools, thereby greatly streamlining Amazon’s operations.
Let’s start right away by clarifying who can benefit from this new reform that has revolutionized the taxation of European e-commerce.
1. Tax on EU intra-community sales
As far as EU cross-border sales are concerned (meaning between 2 EU Member States) the local VAT rules of the country of departure of the goods apply in the case of sellers possessing the following requisites:
- products are stored in only one European country
- the €10.000 distance sales threshold has not been exceeded
Upon losing one of the 2 above-mentioned requisites it will be necessary to apply and pay VAT due to the country of destination for all sales made in Europe. Later in the article you will see examples in the diagram that will clarify this aspect also.
2. Storage in multiple European countries
If you store your goods in warehouses located in more than one European country, as for example do the vendors adhering to Amazon’s pan-European program, as of the 1st of July 2021 you automatically lost the first requisite and you will have to apply tax at destination. And you still have the obligation to register for VAT in each country where your inventory is stored.
3. A single threshold
Following the entry into force of the new reform, the previous sales thresholds (from €35.000 to €100.000) of the single European countries no longer apply and have been replaced by the new single €10.000 threshold.
All the EU cross-border sales towards private customers are counted in the total of this threshold.
It is important to note that even the sales towards countries in which you are VAT registered will be added to the threshold amount whenever a shipment departs from a different country.
4. Registering for the OSS
The One Stop Shop portal has been introduced to facilitate the payment of VAT in all European countries. Once registered for the OSS the online retailers can submit a return and pay VAT for all their EU sales in their own country and they don’t have to register and pay VAT in each country in which their products are sold. The counter will distribute the VAT amounts due to each of the relevant countries.
If you have lost one of the two requirements listed under the above points 1 and 2 and do not adhere to the OSS, you will have to register for tax and submit a VAT return in each of the countries to which your products are shipped.
5. Voluntary registration
It’s possible to register for the new OSS scheme even without having lost the requisites in point 1 and 2. For example, seeing that Italy has one of the highest VAT rates in Europe, this solution could be worthwhile. The choice will depend on whether the money saved by applying the lower VAT rates is more or less than the costs incurred for submitting the quarterly OSS declarations.
Let us now examine when to apply OSS and when not to, through diagrams and important clarifications.
6. Foreign sales: Vat returns or OSS?
The moment you register for the new scheme, all your EU cross-border sales will have to be declared through the OSS, and must not be included in the VAT return submitted to your Member state.
For example, if you are registered for German VAT, domestic sales will be declared in the VAT return, whereas sales from other countries will be declared in the OSS return.
It can also occur that supplies to Italian customers are declared in the OSS return if they have been shipped from abroad.
7. Should B2B Sales be included in OSS?
EU cross-border supplies to business customers do not fall under the new regulations and remain unchanged, hence invoices must be issued without including VAT.
Sales are deemed to be B2B only if the buyer has a valid European VAT number, meaning that the validity of the VAT number must be duly verified on the VIES register before issuing the invoice.
8. OSS Return deadline dates
The OSS returns are due quarterly and must be submitted within the month following the previous quarter. The deadlines are January 31st April 30th, July 31st, and October 31st.
It will no longer be necessary to issue invoices for B2C EU cross-border sales declared on the OSS.
9. When and when not to apply OSS: Practical examples
1) This first diagram indicates when the sale amount contributes to the unique 10,000€ threshold. You can figure this out on your own through the flow of questions included in each block of the diagram below.
2) This second diagram indicates whether to apply the VAT of the country of departure or destination. Follow the logical flow of questions and you will understand in an instant how to separate them efficiently.
10. ZonWizard: filling out OSS statements automatically
ZonWizard helps the seller by calculating which local VAT and tax rate to apply to each transaction based on the regulations and the settings entered by the user for EU cross-border sales.
The tool indicates the date on which the threshold was exceeded, counting only the sales effected on Amazon. If other sales channels are used they will have to be taken into consideration in order to determine whether the threshold has been exceeded or not. By activating the registered for the OSS scheme option the tool will furnish for each country a monthly VAT recap listing the taxable income and VAT amounts of the sales that fall within the OSS return separated from the sales the fall within the VAT return of the Member State.
Thanks to ZonWizard, you can have your OSS and fee statements automatically pre-compiled to give to your accountant, without incurring errors and complicated calculations, and also saving you money and time.
Starting from your free trial, you can get a check-up of your tax management and you can extract your last OSS statement as well as your monthly takings register, based directly on your data.
Click on the button below and activate your free 14-day trial.
You will never be able to do without it again, like thousands of other satisfied European sellers!
It will automatically complete VAT and OSS reports and much more. If you are not yet familiar with ZonWizard's Accounting Tool, you can start your free 14-day trial by clicking on the button belowTry the Accounting Tool for Free
Below are the links to 2 other useful official resources from the European Commission to consult for further study:
European commission OSS explanation.
Thank you for reading this article and we hope you find it helpful in managing your Amazon sales.
Happy sales from ZonWizard!