The EU VAT reform: OSS, IOSS and MOSS
Three key terms define the EU VAT reform: OSS, IOSS and MOSS. What do they mean, though, and how do they affect your business?
In this article, we’ll look into what each one of those terms means, what impact it can have on your business, and explain how you can benefit from the scheme that is right for you.
Distance selling thresholds no longer apply in the EU, and have been replaced by the IOSS and OSS schemes, which allow sellers to file a single VAT return for their sales transactions in the EU.
Let’s look into the details.
The OSS scheme
OSS stands for One-Stop-Shop, and is a system that facilitates tax compliance for businesses who sell to EU customers. In it, businesses can register for VAT in a single EU country and file a single VAT return for all their sales transactions in the EU. This replaces VAT returns filed in each EU country where sellers had customers, and greatly simplifies tax compliance. If businesses choose to do so, they can still file their VAT returns in each country, without registering for OSS.
There are two types of OSS, Union OSS and Non-Union OSS.
1. Union OSS
The Union OSS is for:
- Suppliers based in the EU who ship goods within the EU (i.e. from one member state to another).
- Suppliers based outside of the EU who ship goods within the EU (i.e. goods are located in the EU at the time of sale, and are shipped from one member state to another.
2. Non-Union OSS
The Non-Union OSS is reserved for the provision of services to EU customers from non-EU businesses.
In short, non-EU businesses can register for OSS if they’re selling services to EU customers, or if their inventory is located in the EU. If they’re importing goods into the EU, then they need to register for the IOSS scheme.
The IOSS scheme
The IOSS, or Import One-Stop-Shop, is a scheme that facilitates the import into the EU of goods of a value of €150 or less. The previous VAT exemption threshold of €22 no longer applies: VAT is due on all imported goods and should be charged to customers at the time of sale.
With the IOSS scheme, you benefit from a simplified import procedure for faster imports, and a single monthly VAT return filing for all your imports into the EU. Besides that, your customers do not need to pay any additional import fees or import VAT, which improves their overall experience.
Both non-EU and EU sellers who import into the EU can register for IOSS; for EU businesses, they can register in their home country, while non-EU sellers need to appoint an intermediary.
The MOSS scheme
The MOSS (short for Mini One-Stop-Shop) scheme was the predecessor of the OSS scheme, and has now been replaced by it. It was first introduced in 2015, for specific services, and sellers could use it for their intra-community transactions. It could be used for specific services only:
- Broadcasting services for TV and radio
- Telecommunication services
- Digital services.
The MOSS scheme is now withdrawn. Many countries are transforming MOSS registrations into OSS registrations, to simplify the transition process.
MOSS, OSS and IOSS were all introduced to streamline tax compliance for companies selling goods and services to EU customers, and also to help the EU close its VAT gap.