The One-Stop-Shop is a new VAT scheme that was introduced in July 2021 across the European Union. It offers an alternative for online entrepreneurs and Amazon sellers who, until then, had to register for VAT in a variety of countries if they wanted to expand their business across the EU.
The One-Stop-Shop was accompanied by changes concerning the delivery thresholds in the EU, the taxation of goods sold to end customers across borders, and the VAT registration and filing duties.
In this article, we will dive into the specifics of the One-Stop-Shop program and discuss what opportunities the OSS offers to Amazon sellers and FBA users.
Threshold Changes that Came With the Introduction of the One-Stop-Shop
Until July 2021 online sellers had to register for VAT in their home country and in all EU countries to which sales exceeded the delivery thresholds. The thresholds were set by each European country individually and were usually set at 35,000€ or 100,000€.
In all countries in which sellers were registered for VAT, they also had to submit VAT returns. Following the filing of returns, VAT needed to be paid separately to each tax authority, following differing deadlines and formats. Furthermore, all sales prior to the crossing of the threshold limit were taxed with a domestic VAT rate and the VAT had to be paid to the domestic tax office. This meant that sellers had to continuously monitor several threshold limits and payment deadlines at once.
The country-specific thresholds were replaced by an EU-wide threshold of only 10,000€ when the One-Stop-Shop was introduced. This new, lower threshold is reached by all cross-border sales to European countries combined and, therefore, crossed much earlier. This also means that sellers often have to register in several countries at once. A solution to this is the voluntary registration for the One-Stop-Shop scheme.
The One-Stop-Shop for Amazon Sellers
For business-to-consumer cross-border sales, a One-Stop-Shop registration replaces foreign VAT registrations. Additionally, the EU-wide delivery threshold is no longer applicable. This means that all sales – even the first – are subject to country-specific foreign VAT rates. Thresholds do no longer need to be monitored and no further VAT registrations are necessary – as long as goods are only stored in the home country.
Since no further VAT registrations are necessary, neither are regular foreign VAT returns. Instead, a regular OSS report needs to be prepared and submitted to the tax authorities in the country of OSS registration, the sellers’ home country in the European Union or their country of choice if they are not based in the EU.
Of course, a VAT registration in the home country and the submission of domestic VAT returns are still necessary, as the One-Stop-Shop only applies to cross-border transactions. For the same reason, the usability for the One-Stop-Shop is greater for basic Amazon sellers than for sellers making use of Fulfillment-Programs such as Amazon FBA. Amazon sellers generally only store their products in their home country and the goods are then delivered from there to customers EU-wide. FBA programs, on the other hand, enable sellers to store their products in a variety of foreign European countries.
The One-Stop-Shop and Amazon FBA Sellers
Within the PAN-EU FBA program for example, sellers’ products might be stored in England, France, Germany, Italy, Spain, Poland and the Czech Republic. As soon as products are stored in a country, VAT registrations are mandatory. Therefore, sellers participating in the PAN-EU program need to register for VAT in all countries mentioned above. However, participation in the One-Stop-Shop is still possible.
Deliveries from the home country to foreign countries are taxed with foreign VAT rates and appear in the OSS report, as detailed above. Deliveries from foreign warehouses to customers in the same country are settled in a foreign VAT return, while cross-border deliveries to third countries are again appearing in the OSS report filed in the home country. Lastly, deliveries from foreign warehouses to customers in the seller’s home country appear in the domestic VAT return.
As evidenced, the usability of the One-Stop-Shop for Amazon sellers using FBA is smaller than the advantages of the OSS for basic Amazon sellers storing only in their home country. However, the new scheme can still be advantageous. This depends on the delivery volume, the chosen FBA program, and the customer base and is best decided on a case-by-case basis.
Technical Solutions for the One-Stop-Shop
If you want to or have to use the OSS to fulfill your VAT duties in Europe as an Amazon seller another challenge facing you are the different VAT rates. This is especially true if you sell products from several niches or Amazon product categories to which country-specific reduced VAT rates apply. A solution comes in the form of the hellotax OSS full-service package.
This VAT service provider specialized on the Amazon and FBA E-Commerce business offers their proprietary OSS software in combination with an OSS registration. The software automatically calculates VAT rates and compiles reports which aid in the creation of OSS reports. The hellotax team of local tax accountants then regularly files your OSS returns.
The OSS service can also be used in conjunction with the regular VAT services, which include VAT registrations EU-wide and the submission of regular VAT returns. All your VAT duties are therefore taken care of by one service provider and you can concentrate on scaling your Amazon business while staying worry-free and VAT compliant across the European Union.
Author:
Dominik Larcher
Content Manager, hellotax
