A new EU Tax Regulations: What OSS and IOSS are for Your Store IOSS and OSS Means for Your Store

Jun 10, 2023

On July 1, new EU tax regulations will go in force to ensure it is the European Union (EU) Value-Added Tax (VAT) VAT package for eCommerce is in place. The changes are a major modification to the existing tax laws that were designed to make it easier for businesses and simplify the administrative requirements of retailers. The changes will affect virtually all business-to-consumer (B2C) firm involved in international eCommerce (often called "distance sellers") who trade within the EU.

EU merchants who have crossed a new threshold for the EU that is EUR10,000.00 will need to register for registration in all EU countries in which they conduct the taxable sales of business-to-consumer. They are however permitted to register via the newly-created One Stop Shop (OSS) platform in their country of residence. It allows sellers online to submit a VAT return that's the same throughout the EU and to pay an all-in one tax settlement, which then will be distributed across all countries where they sell.

We've highlighted some of the biggest changes in the next section. Always, we suggest consulting with a tax professional to ensure that your business is in compliance with regulations as well as best practices.

Who are the individuals who will be affected?

The EU VAT eCommerce scheme impacts EU sellers that are over the EU-wide threshold of EUR10,000.00 and importers from outside the EU.

Merchants are able to utilize this One Stop Shop (OSS) filing system for submitting the same VAT returns for all nations that are part of the EU and also file a VAT return for each destination they send their goods to. For each EU destination they deliver to.

The tax rate for VAT is different across the world, with rates ranging between 17 percent in Luxembourg as high as 27 per cent in Hungary ( see the entire list of tax rates) Therefore, sellers should charge the VAT rate applicable to the delivery country for orders made from within the EU. That includes all orders delivered through any of the fulfillment centres in the EU to a location within the EU.

What's changing?

What is it? And what is its purpose?

The current program to sell distance permits businesses to avoid registering to become VAT registered in the country in which they are selling B2C tax-exempt supplies as it's the situation that the quantity of supplies don't exceed the minimum threshold required in the case of distance selling within a specific year. Businesses can apply the tax rates for local retail sales for these sales, as if the sold goods never left the country that they made them available in. When the threshold has been exceeded within a certain country, a business has to register with the VAT authorities, fill out VAT returns and charge the local tax rate for the country of registration for B2C sales.

Let us look at an instance of an German company selling products in physical form to consumers in Romania. If the German company is able to meet the annual limit for Romanian sales of EUR25,305.00 The revenues of the company can be tax deductible in Germany that is the standard German tax rate of 19.

After the threshold is attained and the threshold is set as EUR25,306.00 Once the threshold has been reached, Romanian sales become tax-deductible in Romania and, therefore, need to be registered and charged taxes at the Romanian tax rate of 19%. is 19%..

What will happen after the change is in force:

The thresholds for distance selling in July for particular nations will be cut off in the EU because a new threshold of EUR10,000.00 will be set. After the threshold is reached businesses will have to be a part of states in which they are able to create tax-free B2C products. However, they could opt to make this registration via the new One Stop Shop system in the state that they are operating in.

It will allow eCommerce sellers to submit one VAT tax return for the entire EU and to pay one tax bill that is distributed across the countries that they offer their products. The scheme is an extension of the small one Stop Shop (MOSS) program which is available to digital service suppliers.

So that it's possible it's possible that the German physical goods dealer which provides taxable B2C supplies for Romanian, Czech, and Polish private clients, need not register within those three countries. After they've crossed the threshold for all EU countries, they'll register to OSS in Germany and file an individual tax return and make only the tax amount of one (instead instead of 3). However, any regional German B2C transactions will need to be included on their local tax return along with the local VAT which will have to be paid.

What does it mean for sellers who don't belong to the EU? EU?

The VAT exemption which applies to the importation and use of products with a value less than EUR22.00 is revoked. As a result, all products brought into the EU will be taxed at VAT. Sellers who are not in the EU are not required to be registered, meaning that they need to file the first B2C transaction.

To simplify VAT compliance for non-EU sellers, the Import One Stop Shop (IOSS)will be set up. IOSS will allow single returns to businesses that choose to charge VAT at point of sale if consignments are smaller than EUR150.00. If a company chooses to not sign up for VAT IOSS the cost will be paid by the buyer when they import goods from the EU. Any goods valued over EUR150.00 will be taxed on arrival.

IOSS may affect clearance of customs with the possibility that import items are processed quicker. With some shipping providers when VAT is due at the time of sale, then the seller could indicate the IOSS code on the Commercial Invoice information for the shipping firm in order to declaring the customs.

Merchants can find information that's beneficial to merchants

For additional information about changing your tax settings, go to our tax documents.

HTML0If you are thinking of altering your tax preferences you should strongly consider that you seek out experts in tax law in order to be sure that your tax arrangements comply with the law.

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