The One Stop Shop is an EU-wide scheme introduced in July 2021 to make it easier for merchants in the EU to account for and pay VAT. In this article, we’ll explain what the OSS is, how it works, and how the changes affect Amazon merchants.
What is the One Stop Shop (OSS)?
OSS – The situation to date
Until July 2021, country-specific delivery thresholds of €35,000 on average applied to distance sales in the B2C sector in the EU. If the turnover from long-distance sales to a particular country was below their delivery threshold, there was nothing to do. However, as soon as sales exceeded the delivery threshold, traders had to register for VAT there, obtain a VAT identification number, and pay the VAT for these transactions in the respective country. Furthermore, additional advance sales tax returns were regularly due in this country. Especially Amazon merchants who sold via the Amazon marketplaces to many different European countries often had to suffer from the many tax tasks.
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Changes to the OSS procedure since July 2021
With the introduction of the
One Stop Shop in July 2021
these regulations changed. The new standards affect the following:
- Delivery thresholds in the EU
- Taxation of goods sold in B2C distance selling
- Obligation to register for VAT
- Sales tax deduction
First, the country-specific delivery thresholds in the EU were abolished and replaced by an EU-wide delivery threshold of €10,000. All sales to EU countries with a value below this threshold are subject to the home VAT rate and VAT is paid to the home country. Thus, the sales are treated as if the goods were sold to domestic private customers.
However, if the value of goods sold at a distance to private customers in other EU countries exceeds the EU-wide delivery threshold, the trader has a lot of work to do. Sales tax registrations and all subsequent tax obligations must be fulfilled immediately upon exceeding the threshold in all countries to which sales are made. This includes taxing the products sold at country-specific tax rates, obtaining a sales tax identification number, paying sales tax to the respective country, and filing tax documents such as advance sales tax returns. This means that bureaucratic tasks in at least one other country will now no longer be incurred after an average of €35,000 in sales, but as soon as products worth €10,000 are sold. To avoid this, merchants should register for the One Stop Shop in their home country.
Use of the One Stop Shop
According to the registration, from now on all B2C distance sales to EU countries must be taxed at the respective VAT rate. Sales whose value does not exceed the EU-wide delivery threshold of €10,000 are also no longer subject to the domestic tax rate. However, in return, all sales tax may be paid to the home authorities. The tax office then distributes the amounts to the countries to which the sales tax is owed. This means that VAT registration and submission of documents is no longer required there either. The home sales tax identification number is sufficient to
to sell at a distance to private customers in other European countries.
to be able to
However, this regulation only applies insofar as storage is not involved. As soon as goods are stored in another EU country, for example in the course of a fulfilled-by-Amazon program, registration for VAT and the submission of advance VAT returns are again required there. Registration for the OSS is also on a voluntary basis. The use of the EU-wide delivery threshold is therefore still possible.
OSS for Amazon sellers without FBA participation
As long as products are only stocked in the home country, there is nothing to stop you from using OSS to roll out Amazon PPC campaigns internationally. However, registration is not worthwhile for all Amazon merchants.
Small traders, for example manufactures, who sell only a few goods to private customers in other EU countries via Amazon, can continue to use the EU-wide delivery threshold and waive registration for the OSS. This is particularly worthwhile if the sales tax rates abroad are higher than those in Germany. Since sales within the delivery threshold are subject to the domestic sales tax rate, this can reduce the sales price or increase profit.
However, for larger sellers who definitely exceed the delivery threshold but do not participate in an Amazon fulfillment program or take advantage of other fulfillment offers, registering for OSS is definitely worthwhile. The possible losses due to higher foreign VAT rates are recouped by the saved costs for tax representatives and co. abroad. In addition, great time savings can be expected due to the simplification of processes. But beware: as soon as goods are stored abroad in the EU, registration for VAT there is again mandatory.
However, compiling an OSS report is no piece of cake either. In order to file an OSS pre-declaration, all transactions must first be sorted by country of origin of the package, country of delivery, and tax rates applied. The respective sums must then be entered individually into the correct form of the domestic tax authorities. So the more different product categories served, the more countries stocked, and the more heterogeneous the customer base, the longer it takes to submit the OSS report.
However, specialized Amazon tax consultants, such as hellotax, can help you navigate tax tasks in multiple countries. If you choose the One-Stop-Shop, the hellotax team of specialized local tax advisors will register you for the OSS and the provided software will automatically compile OSS reports ready for filing. However, the tax advisor team can also submit these preliminary returns immediately. This means that traders can continue to concentrate on their business, while all sales tax-related tasks are taken away from them.
OSS for Amazon FBA merchants
Despite OSS registrations, local sales tax registrations may still be required. This is the case, for example, for Amazon merchants participating in FBA programs. A sales tax registration and all subsequent tax tasks are mandatory where an Amazon merchant’s products are, or could be, stored as part of FBA. For example, storage is possible through Amazon’s PAN-EU program in a variety of countries, but not always necessary. Nevertheless, registration is mandatory in all participating countries. However, this does not mean that registration for the OSS in the home country is unnecessary.
All products shipped from an Amazon warehouse in another EU country to private customers in the respective country are subject to the local tax rate. The expirations must be declared in an advance VAT return there and the VAT must be paid directly there. However, sales from warehouses in other EU countries, for example the seller’s home country, to customers in that country, are again subject to the regulations listed above. Depending on whether the delivery threshold is exceeded and registration for OSS is available, they are declared and taxed in the foreign or home country.
hellotax can not only relieve you of tax tasks, but also advise you on the subject of OSS for FBA merchants. They can help you find the best option for your Amazon business, but can also register you for sales tax in multiple countries, and offer a sales tax automation tool that controls the delivery threshold, offsets sales tax amounts, and helps with filing advance sales tax returns. The services can also be combined. This allows hellotax to simultaneously take care of local sales tax obligations and OSS filings from Amazon FBA merchants.
Conclusion – Amazon OSS
The introduction of the One Stop Shop in Europe has changed a lot for B2C remote sellers and Amazon merchants. Some regulations have simplified bureaucratic obligations. Others make sales tax compliance even more complicated. The most important points and standards for small and large Amazon stores were presented in this article. However, the decision between different warehouse options and tax registrations must be made by each Amazon merchant based on their own business model.