Historically, staying on the right side of VAT compliance in the EU has been challenging. That’s because all 27 EU member states can set their own VAT rules, rates, and administrative processes. This means more challenges and higher business costs, which are all handbrakes to growth.
But it’s not just companies that get the short end of this stick. Unnecessary red tape slows trade and stalls the economic growth of the EU. The One-Stop Shop (OSS) was created to change this, particularly in the EU's Digital Single Market context. It simplifies VAT by unifying everything into one system. But how does it work? And why does it matter? Let’s dive in.
If your company wants to simplify VAT management, consider the One-Stop Shop (OSS) as your gateway to the EU. Introduced on July 1, 2021, it allows companies to register for VAT in a single member state and submit one VAT return for all cross-border sales.
Previously, B2C companies had to register and comply with VAT regulations in each country where their sales exceeded a set threshold. Now, with an EU-wide threshold of €10,000, businesses can register for the OSS instead.
The OSS significantly reduces administrative complexity for B2C businesses, streamlining VAT processes with one registration and one return for all cross-border sales. This relief from paperwork can make your business operations feel lighter and more efficient.
Firstly, the European Union’s OSS isn't mandatory. So, why is this optional system recommended? In short, it allows businesses to declare and pay VAT on eligible goods and services sold to consumers across multiple EU member states. But through a single online portal.
It’s important to note that the OSS applies only to B2C (business-to-consumer) transactions, not B2B.
The OSS was created for any business that sells goods and digital services cross-border to consumers within the EU. This includes E-commerce retailers selling physical goods through online platforms and Digital service providers offering online courses, software subscriptions, or e-books.
This includes:
The OSS covers a range of transactions to simplify VAT compliance.
What falls under its scope?
The OSS doesn’t just streamline compliance tools; it spurs growth by reducing costs and enabling businesses to focus on what they need to do most: grow.
How exactly?
Making VAT compliance simpler impacts every stakeholder in the e-commerce supply chain, whether you're an online seller or marketplace based in the EU or elsewhere.
Streamlining the process results in smoother logistics for postal operators and couriers. At the same time, EU customs officials and tax administrations can collect revenue faster with fewer resources. And lastly, your customers benefit from faster, more reliable cross-border transactions.
Here’s how your company can become a part of these efficiency gains:
Any business can register for the OSS in its home country. However, if you are based outside the EU, you can register in any EU member state of your choice.
It’s true, that the OSS makes VAT registration more efficient than ever. But, it’s critical to note that VAT rates vary across the EU. Therefore, companies are still responsible for charging the correct VAT rate for each EU member state based on customer locations.
The OSS requires businesses to file a consolidated VAT return detailing all cross-border sales every quarter. The good news is that you only have to submit this once in either the EU state where you’re based or the one you choose if your company resides outside the bloc.
Once the VAT return is submitted, you must pay the VAT owed through the OSS portal. The EU member states distribute it accordingly.
STREAM simplifies EU VAT compliance beyond the One-Stop Shop (OSS) by offering a suite of services to simplify and streamline international trade operations.
How can we help?
By managing export, transit, and import processes with full compliance, STREAM enables businesses to focus on growth without the complexities of cross-border VAT obligations.
