The One-Stop-Shop is a new set of regulations concerning VAT duties in the European Union that was introduced in July 2022. The OSS offers a lot of opportunities and other steps on the way to EU-wide VAT compliance for online sellers and included changes concerning
- Delivery thresholds in the EU
- Taxation of goods sold in B2C distance selling
- VAT registration duty
This is especially true for entrepreneurs selling goods via Amazon and delivering with the help of FBA programs, as they tend to sell their products on a variety of marketplaces in Europe and in several European countries. However, the usability of the One-Stop-Shop for Amazon Sellers is greater than the usability for Amazon FBA sellers. Find out why below.
One-Stop-Shop for Amazon Sellers
Previously Amazon Sellers had to register for VAT in their home countries and in all countries to which sales exceeded the delivery thresholds, which were set by each country and usually set at 35,000€ or 100,000€. In all countries in which Sellers registered for VAT, they had to submit regular VAT returns.
Following the filing of returns, VAT needed to be paid separately to each tax authority, following differing deadlines and format. Furthermore, all sales prior to the crossing of the threshold limit were taxed with domestic VAT rate, which was paid to the domestic tax office, while all sales after the threshold was exceeded were taxed with foreign VAT rates and the VAT liabilities paid to foreign tax authorities.
All of the processes detailed above changed with the introduction of the One-Stop-Shop. While participation in the OSS happens on a voluntary basis, the introduction of the One-Stop-Shop was also accompanied by the abolishment of the former country-specific delivery thresholds in favour of an EU-wide applicable threshold of 10,000€. This new delivery threshold is reached by all cross-border deliveries combined and, therefore, crossed much earlier, leading to an increased urgency for foreign VAT registrations. This is why the OSS is a good option for many Amazon Sellers.
With the One-Stop-Shop, an OSS registration and the submission of an OSS return in your home country replaces the foreign VAT registrations and returns. From the beginning, foreign VAT rates need to be applied to cross-border sales, through all VAT liabilities are paid collectively to the domestic tax authorities who then redistribute the amounts.
However, the OSS only applies to cross-border transactions. A VAT registration in your home country and the submission of domestic VAT returns are, therefore, still necessary. For the same reason, Amazon Sellers using Fulfilled-by-Amazon programs to deliver their products to customers EU-wide are facing a challenge, as products are stored in warehouses located in various countries and might not always cross borders when being delivered.
One-Stop-Shop and Amazon FBA
Within the PAN-EU FBA program, participant’s products might be stored in England, France, Germany, Italy, Spain, Poland and the Czech Republic. Just based on storage, VAT registrations are mandatory in all of these countries. 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 froeign VAT return, while 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 pure Amazon Sellers selling only from 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 fulfil 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 specialised 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.
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