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Are you a business owner who wants to offer goods and services beyond the borders of
the country in which you are registered? If you sell exclusively to
consumers, VAT OSS is a very beneficial option for you.
To reach as many customers as possible, sellers and service providers use
various platforms (MarketPlace, Allegro, Amazon and others). This enables them to gain
customers abroad. They must remember that selling goods or electronic services
to private individuals in another EU country entails several tax obligations.
On 1 July 2021, rules simplifying these settlements came into force as part of the
so-called VAT e-commerce package. This was possible in part thanks to the introduction of VAT OSS.
We explain what VAT OSS is, when it is worth using this scheme and what it offers
businesses.
To reach as many customers as possible, sellers and service providers use
various platforms (MarketPlace, Allegro, Amazon and others). This enables them to gain
customers abroad. They must remember that selling goods or electronic services
to private individuals in another EU country entails several tax obligations.
On 1 July 2021, rules simplifying these settlements came into force as part of the
so-called VAT e-commerce package. This was possible in part thanks to the introduction of VAT OSS.
We explain what VAT OSS is, when it is worth using this scheme and what it offers
businesses.
What is VAT OSS?
VAT OSS (OSS stands for “One Stop Shop”) is a VAT settlement scheme thatreplaced the earlier VAT MOSS (Mini One Stop Shop) scheme. The latter allowedbusinesses established in Poland to settle VAT on telecommunications,broadcasting and electronic services (TNE services) provided to private individuals in the EU outsidePoland without registering for VAT in the customers' countries.On 1 July 2021, the VAT MOSS scheme was expanded to cover distance sales of goodsto those customers (known as WSTO), resulting in the EU VAT OSS scheme.Here it is also worth mentioning WSTO, or intra-Community distance salesof goods. This term replaced traditional mail-order sales.
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VAT OSS: benefits
● VAT OSS is an electronic one-stop shop that simplifies VAT settlement; ● sellers do not have to register for VAT in each buyer's country separately even after exceeding the foreign-sales threshold; ● it is very easy to start using the scheme: simply submit a VAT VIU-R application to the tax office in the country where the business is established; ● VAT OSS is voluntary, and a declaration once submitted does not compel continued use. A taxpayer may give up settling VAT this way and register locally for VAT in the buyer's country.
Who can use VAT OSS?
VAT OSS is a simplification for businesses that provide services and sell goods online to customers within the European Union. The regulation accommodates all companies that would like to operate in foreign markets but have previously been deterred by concerns about the complications of settling tax in different countries.
The EU scheme is available to businesses that:
● have a Polish tax identification number (NIP), ● are VAT taxpayers, ● have sales to buyers in other EU countries that do not exceed EUR 10,000, ● make intra-Community distance sales of goods, ● provide services to private individuals that are taxable in other EU countries
. Importantly, VAT OSS is intended exclusively for businesses that sell goods or provide services to individual customers, meaning consumers who do not run businesses. If an order is placed by a company operating in the European Union, the VAT OSS rules do not cover that transaction.
Is VAT OSS mandatory when a business sells goods or services abroad?
Not every business making intra-Community sales of goods or services to private individuals in other EU countries has to use VAT OSS. It does not apply to a business whose foreign sales in the last 12 months have not exceeded EUR 10,000. After the threshold is exceeded, registration becomes mandatory by the tenth day of the month following the month in which the EUR 10,000 EU distance-sales limit was exceeded. For example, if that happened in September 2024, the seller must register for VAT OSS by 10 October 2024.
VAT OSS records: the key rules
Taxpayers who decide to use this simplified VAT settlement system must keep transaction records and retain documentation for 10 years after the end of the relevant tax year. Failure to present the records at the request of the tax authorities results in a financial penalty.
The records must include the following information:
● the member state from which the goods or services were ordered,
● type of service provided or goods sold, ● date of performance of the service or delivery of goods, ● taxable amount, ● amounts increasing or decreasing the taxable amount, ● VAT rate applied, ● amount of VAT and its currency, ● date and amount of payments received, ● information on any advance payments, ● details of the recipient's registered office or permanent residence.
The tax authority in the country where the VAT OSS business is registered and the authority in the country of consumption, where the recipient of goods or services lives, may request these records. Records are supplied electronically.
VAT OSS: other rules
● A business using VAT OSS must settle VAT OSS quarterly (a quarterly tax return), even if no sales took place during the period under the scheme. ● Until the EUR 10,000 limit is exceeded, taxpayers apply the VAT rate of their country of establishment. In Poland the standard rate is 23%, though other rates also apply. Under OSS, businesses use the VAT rates set by each country in which they sell. ● Filing a declaration to use VAT OSS is free.
OSS procedure: summary
The One Stop Shop (OSS) allows taxpayers supplying services or goods to consumers in the EU to file returns and pay VAT in one member state. After exceeding the EUR 10,000 sales threshold, they must begin settling foreign sales in the country where the goods are delivered. They have two options: ● VAT registration in the country of delivery, ● registration in the One Stop Shop.
Not every sale of goods and services in the EU allows registration under VAT OSS. It is possible only for sales of goods and services to consumers, but a business must also register for VAT if, for example, it imports goods or stores goods abroad.
VAT OSS: our offer
TaxCoach accounting firm supports businesses wishing to sell goods or services abroad and use VAT OSS.
● We analyse transactions to determine whether a client needs to register for VAT OSS, settle past periods or register for the One Stop Shop; ● We register the company in the system; ● We maintain records and, at the client's request, can store and present them whenever the tax authorities request them; ● We represent clients in disputes with tax authorities.
If this article interested you, explore our e-commerce accounting services and see how we can help:
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