E-COMMERCE PACKAGE – VAT CHANGES AS OF 1 JULY 2021

VAT-OSS procedure for B2C transactions

What is OSS? What is changing as of 1 July 2021?

One-Stop-Shop (OSS), is an electronic system that simplifies VAT settlements for e-sellers of goods and services offered to private customers across the EU, as it allows in general to:

electronic registration for VAT purposes in one EU Member State in the case of distance sales of goods within the EU and in the case of providing services to individual customers (B2C),
avoiding the need of registration VAT in the many EU Member States,
report and pay of the VAT due for all supplies of goods and services in one electronic, quarterly VAT declaration, regardless of if transactions were performed,
cooperation with a single tax administration of the EU Member State of identification, even in the case of sales abroad.

The e-commerce package regulations in B2C:

repeal the provisions regulating the so-called distance sales from the territory of the country and distance sales within the territory of the country,
in place of the distance selling from/to the territory of the country, the so-called intra-community distance sales of goods for which completely new rules and limits will apply,
Mini-One-Stop-Shop procedure for VAT settlement and currently applies only to providing telecommunications, broadcasting, and electronic services will be extended and replaced by One-Stop-Shop (OSS).

Notice!

A new common threshold in all EU countries of EUR 10,000 total for B2C transactions as the intra-community distance sales of goods and telecommunications, broadcasting, and electronic services.

The EU-OSS procedure – which supplies concern and who can use?

Which supplies are reported in EU-OSS?

EU – OSS procedure will apply in the case of:

intra-Community distance sales of goods B2C
providing telecommunications, broadcasting, and electronic services (TBE services) and other than TBE services for consumers from the EU Member States, where the place of services supply is the territory of EU Member State of consumption.
delivery of goods B2C via electronic interfaces.

Notice!

As the intra-Community distance sales of goods – means the delivery of goods dispatched or transported by or on behalf of the supplier, also when the supplier is involved indirectly in transport or shipment of goods, from the territory of EU Member State other than the territory of EU Member State where the shipment or transport of the goods ends to the purchaser in B2C transaction.

Who can use the EU-OSS procedure?

The e-commerce sector, such as:

a taxpayer established (headquarter or fixed establishment) in one of the EU Member State for:
- intra-Community distance sales of goods B2C within the EU,
- supplies of B2C services taking place in EU Member State in which he is not established,
a taxpayer not established (lack of headquarter or fixed establishment) in one of the EU Member State for:
- intra-Community distance sales of goods B2C within the EU,
an electronic interface facilitating supplies of goods (deemed supplier) for:
- intra-Community distance sales of goods B2C within the EU,
- certain domestic supplies of goods.

Registration in EU-OSS procedure

Registration for the EU-OSS procedure before OR after exceeding the threshold of EUR 10.000 is voluntary. However, it allows avoiding VAT registration in individual EU Member States where the taxpayer makes e-commerce B2C sales.

Notice!

possibility to register for the EU-OSS procedure from 01/04/2021 (final registration will take place after the verification and implementation of the EU e-commerce regulations),
registration will be only possible electronically,
to register and use the EU-OSS procedure, taxpayers must previously obtain a VAT ID number through the standard VAT registration procedure.

Each EU Member State will have an online OSS portal where companies will be able to register. However, this single registration will be valid for all e-sales to consumers in the other EU Member States.

The non-EU OSS procedure – which supplies concern and who can use?

Which supplies are reported in EU-OSS?

Non-EU OSS procedure will apply only in the case of providing:

telecommunications, broadcasting, and electronic services (TBE services) and
other than TBE services for consumers from EU Member States where the place of services supply is the territory of EU Member State of consumption.

Who can use the EU-OSS procedure?

The non-EU procedure can be used only by:

foreign taxpayers – without headquarter or fixed establishment in the EU Member State.

Registration in non-EU OSS procedure

Registration for the non-EU OSS is voluntary. However, it allows avoiding VAT registration in individual EU Member States where the taxpayer makes e-commerce B2C sales.

Notice!

possibility to register for the non-EU OSS procedure from 01/04/2021 (final registration will take place after the verification and implementation of the EU e-commerce regulations),
registration will be only possible electronically in the country of identification,
the tax authorities assign the VAT number only for purposes of non-EU OSS procedure,
to register and use the non-EU OSS procedure, taxpayers are not obliged to previously obtain a VAT ID number through the standard VAT registration procedure.

Each EU Member State will have an online OSS portal where companies will be able to register. However, this single registration will be valid only for all B2C services in the scope of non-EU OSS procedure to consumers in the other EU Member States.

Notice!

If the taxpayer qualifies for both the EU-OSS procedure (due to the intra-Community distance sales of goods B2C within the EU) and the non-EU OSS (due to the B2C services provided), then he should register separately for both procedures.

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Important – OSS regime – what e-commerce sellers should be aware of?

Invoicing – the e-commerce seller registered under OSS – EU and non-EU OSS procedure – does not have to issue an invoice, unless requested by the customer. If invoices are issued, must be compliant with invoicing rules of the identification EU Member State.
VAT records – the sellers are obliged to keep the evidence expressed in EUR including a number of data. The records must contain:

Country of consumption,
Type of services/quantity of goods delivered,
Date of service execution/delivery of goods,
The net value of goods (tax base) with an indication of the currency used,
Other values increasing / decreasing value of tax base,
VAT rate,
VAT amount with an indication of the currency used,
Date and amount of payment,
Advance payments received,
Data included on the invoice if issued,
Surname/name of the customer, if known to the taxpayer
The information used to identify the place where the customer is established or has his permanent address or usually resides,
All proofs connected with returns of goods, net value, and VAT rate.

Notice!

VAT records should be kept for 10 years,
the above information is subject to record by a taxpayer in a way that can be immediately available by electronic means and for each individual transaction.

3. Exchange rate – if the payments for rendered services or goods delivery are made in a different currency than EUR, the exchange rate used to express the amounts in EUR shall be the last day of the accounting period announced by the ECB, or the following day if not published.

4. Proof of delivery of goods to another EU country – the seller of goods should collect the confirmation of delivery to the customer in another EU country. In case of missing proper documentation, a delivery is additionally taxed as domestic delivery of goods.

5. Correction of OSS VAT return – if any inaccuracy in submitted VAT return appears, the correction is made in the nearest VAT return, not later than within 3 years counting from the date of the end of settlement period for which the errors were found.

As ASB Tax

we provide complex support in implementation taxpayers’ business for VAT, trying to find the best individual solutions,
we support companies in the registration process to obtain the VAT ID number and for the purpose of OSS procedures in Poland, the Czech Republic, Slovakia, Hungary,
we provide a VAT compliance settlement on behalf of the taxpayers which allows properly fulfill tax obligations in the countries of the CEE region.

For more information, please feel free to contact us: