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One-Stop-Shop (OSS) – the EU’s simplified VAT procedure

The EU-wide “One-Stop-Shop” (OSS) procedure is a further development of the “Mini-One-Stop-Shop” and relates specifically to European VAT regulations. These regulations are aimed at companies based in Germany and other authorised companies.

Since July 1, 2021, registered companies have had the option of submitting sales that fall under special regulations and are processed to the Federal Central Tax Office in a central tax return.

What exactly is the OSS process?

The OSS procedure is intended to act as a central point of contact for documenting, reporting and paying VAT on so-called distance sales to private end customers within the European single market and for certain domestic supplies of goods.

Distance selling refers to distribution channels such as online or e-commerce sales as well as mail order sales within the EU and across borders.

What are the advantages of the OSS process?

  1. Minimising the bureaucratic burden: The OSS procedure was introduced to free companies that supply goods to different European countries from the need to register for tax in each country individually. This measure aims to minimise the financial burden and bureaucracy associated with such registrations.
  2. Modernisation of tax processing: The new EU portal allows all bureaucratic steps to be processed in one central location . The One-Stop-Shop has undergone a comprehensive modernisation of the entire system for VAT settlements, advance returns and payments.
  3. Simplification of tax obligations: The electronic system is viewed with great expectations from the political side. The OSS procedure was created not only to combat tax evasion, but also to make it easier for sellers and online traders to meet their tax obligations. To participate in the OSS procedure, all you need to do is register, which in Germany is carried out by the Federal Central Tax Office (BZSt).
  4. Centralisation of tax obligations: Companies that participate in the OSS procedure can breathe a sigh of relief, as the time-consuming registration for VAT in various countries is no longer necessary. From now on, a central OSS VAT pre-registration in the country in which the OSS registration was made is sufficient. This is where all sales tax is paid. The local authorities are responsible for forwarding the tax revenue to the relevant countries.
  5. Voluntary: Participation in the European OSS procedure is optional. Companies have the freedom to decide whether they want to make use of the benefits of this system. It offers a flexible solution for simplifying VAT accounting and payment, while companies retain the freedom to choose whether to participate in the OSS procedure or retain their existing procedures.

Who is authorised to register for the OSS procedure?

The OSS procedure is aimed at certain groups of companies that want to simplify VAT charges for cross-border services and goods deliveries within the EU. Here are the main players who can register for the OSS procedure:

  1. Domestic companies that provide services against payment to private individuals in EU Member States in which they are not resident. This also applies to intra-Community distance sales of goods or the provision of an online platform for the sale of goods within a Member State.
  2. Entrepreneurs outside the EU who have a facility such as a warehouse in Germany and deliver goods from there to private individuals in other EU member states.
  3. Providers of telecommunications, broadcasting and television services (TBE services): Companies that provide TBE services in various EU countries can use the OSS procedure.

What are the obligations for companies that register for the OSS procedure?

Participation in the OSS procedure entails certain obligations for companies. These basic obligations are as follows:

  • Timely submission of the tax return: The tax return must be submitted electronically to the Federal Central Tax Office by the end of the month following the calendar quarter. The submission deadlines are as follows:

First calendar quarter: Until April 30

Second calendar quarter: Until July 31

Third calendar quarter: Until October 31

Fourth calendar quarter: Until January 31 of the following year

Even if there are no sales in the quarter in question, a tax return (zero return) is required by the specified deadlines.

  • Timely payment of registered taxes:

The tax contributions registered in the OSS procedure must be transferred in such a way that the payment is received by the competent federal treasury by the end of the month following the calendar quarter. Direct debit is not possible.

  • Updating the registration data:

Changes to the registration data must be communicated electronically to the BZSt by the tenth day of the month following the change at the latest. Company name and address changes must be reported exclusively to the responsible tax office.

  • Deregistration from the special regulation:

In certain cases, the registered company must deregister from participation in the OSS procedure by the tenth day of the following month at the latest. This applies if the provision of services is discontinued, the conditions for participation cease to apply in all EU member states or registration in another EU member state due to changes in the conditions in Germany.

  • Recording obligations:

Accurate records are required for sales made using the OSS procedure in order to check tax returns and payments. Upon request, these records must be made available electronically to the BZSt, the competent tax office or the central authorities of other EU member states. The retention period for this data is ten years.

The EU-wide sales threshold for certain sales

In order to keep the OSS process in order, the EU has introduced a regulation known as the “delivery threshold regulation“. According to this regulation, all intra-Community sales are deemed to be domestic sales as long as the annual turnover does not exceed EUR 10,000. This has the following practical effect: As long as annual sales are below the EUR 10,000 threshold, sales are declared in accordance with conventional (domestic) sales regulations and the corresponding tax is paid to the local tax office.

How can I register my company for the OSS procedure?

To take part in the online procedure, you need to register with the One-Stop-Shop. Although the same regulations apply in all EU countries, each member state has its own registration for the OSS. In Germany, registration with the OSS takes place via the BZSt online portal (BOP). Registration usually begins on the first day of the quarter following registration. This means that the OSS application must be completed by the end of the quarter in order to be able to submit an OSS application in the following quarter.

Important information you should know about the OSS process:

  1. The OSS procedure does not apply to the sale of goods via distance selling within a single EU member state.
  2. For each individual sale, the corresponding VAT rate of the country concerned must be applied. Domestic sales must be listed in a separate, conventional advance VAT return. The OSS procedure only concerns business activities within the EU, but not for the country within the EU in which the registration for the OSS took place.
  3. Always be sure that the way you store your sales data allows you to track the country and apply the appropriate VAT rate.

Conclusion:

The EU-wide "One-Stop-Shop" (OSS) procedure offers an improved option for processing European VAT regulations. It is aimed at companies based in Germany and enables centralised reporting of sales under special regulations to the Federal Central Tax Office (BOP). This procedure particularly facilitates sales to private end customers within the EU and simplifies the tax processing of distance sales. The benefits include a reduction in bureaucracy, modernised processing, simplified tax obligations, centralised duties and the option to participate.

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