The One Stop Shop is a simplified method of declaring and paying VAT on the distance sale of goods and services to the EU where the value exceeds €10,000/ £8,818. Here we explain the requirements of the One Stop Shop and its benefits for businesses.
Contents
- Introduction
- When can I use the One Stop Shop?
- What are the requirements of the One Stop Shop?
- What are the benefits of the One Stop Shop?
- What actions do I need to take to use the One Stop Shop?
- Further information
Introduction
The One Stop Shop (OSS) is a simplified method of declaring and paying VAT on the distance sale of goods and services to the EU where the value exceeds €10,000/ £8,818. Within the OSS there are two schemes the Union Scheme and the Non-Union Scheme.
Suppliers that are not established in the EU, can only use the Union Scheme when they are making intra-community distance sales of goods in the EU. Therefore, NI companies will use the Union Scheme for goods. However, they would use the non-Union Scheme for distance supply of services.
The use of the OSS is not mandatory. If OSS is not used, then VAT will be payable in each EU member state to which goods are sold, meaning requirements for multiple VAT registrations.
When can I use the One Stop Shop?
The One Stop Shop can be used under the following conditions:
- Where traders’ Business to Consumer distance sale of goods (eg, online sales, phone sales, mail order sales and sales via digital TV) to the EU exceed €10,000/ £8,818, then traders have two options:
- Register and account for VAT in each EU member state to which goods are sold.
- Register for the One Stop Shop (OSS).
- In addition to utilising the OSS to report the intra-community distance sale of goods, the OSS can also be used to declare the following services:
- Cross-Border supplies of telecommunications, broadcasting and electronically supplied services to non-taxable persons within the EU.
- All other Cross-Border supplies of services to non-taxable persons within the EU.
Note: Where EU based suppliers (e.g., suppliers based in Ireland) provide services of this nature to customers in Northern Ireland, these supplies should not count towards the €10,000 distance sales threshold nor be declared via the OSS. Instead, the EU supplier is required to register for VAT in the UK and account for VAT through a UK VAT return. This is due to the fact the NI is no longer treated as part of the EU in respect of services and the UK has a NIL VAT threshold for non-established traders.
What are the requirements of the One Stop Shop?
Once registered for the OSS, businesses must account for VAT on all distance sales through the OSS.
The supplier will need to charge the appropriate rate of VAT, based on the EU member state where their consumer is located and to which the goods are being sold.
Traders will need to submit a quarterly EU-wide VAT return and pay across the VAT due in respect of EU-wide sales.
Under the OSS, there is a requirement to retain records for a minimum of 10 years, which is a significantly longer period than many businesses in Ireland and Northern Ireland would be used to.
What are the benefits of the One Stop Shop?
- The OSS overcomes the administrative burden of having to register in each EU member state where customers are based, therefore overcoming the requirement to file periodic VAT returns in each EU member state in which the company is registered.
- Traders will only have to deal with one administration, in one language, regardless of the fact that sales are EU-wide.
- Rather than registering and accounting for VAT in each EU member state, businesses will file an EU-wide OSS return in an EU member state or in Northern Ireland, depending on where the business’ fixed establishment is located.
It is important to note that businesses which are deemed to be trading under the Northern Ireland Protocol (i.e., where the business has obtained an XI VAT number) will be entitled to register for the OSS in the UK in respect of the distance sales of goods.
What actions do I need to take to use the One Stop Shop?
The following key actions ought to be taken by suppliers in Ireland and Northern Ireland in relation to both the OSS and IOSS:
- Traders based in Northern Ireland, Ireland or any EU member states supplying goods and services to non-taxable customers in Northern Ireland / other EU member states ought to review the OSS and IOSS schemes and register where it appears that the scheme will be beneficial.
- Impacted businesses must determine whether systems updates are required to allow them to identify and apply VAT at the appropriate rates in multiple jurisdictions. Systems must also be capable of facilitating the tracking of sales per jurisdiction in order to ensure that OSS returns can be filed accurately. The impact that different VAT rates in different jurisdictions may have on pricing must be considered.
- All existing foreign EU VAT registrations should be reviewed to determine if they can be cancelled and replaced by OSS registration.
- Businesses registered for the OSS must ensure that their processes are sufficient to allow them to retain the data required by the 2021 EU VAT reform for the required 10-year period
from 31st December of the year in which the transaction was carried out.
Where a business is registered for the OSS, they must use the scheme to declare and pay EU VAT due on all supplies. At the same time the Union scheme VAT return is submitted to the Revenue Commissioners or HMRC (by the end of the month following the end of the tax period covered by the return), the business must remit all EU VAT payable to Revenue/ HMRC. If no Union scheme VAT return is submitted by the relevant date, the Revenue Commissioners or HMRC will issue an electronic reminder to the relevant person after a period of 10 days. Where no payment has been made, the Revenue Commissioners will issue an electronic reminder to the relevant person after a period of 10 days.
Further information
Revenue.ie information about the Union scheme - One Stop Shop.
GOV.UK information about the EU VAT e-commerce package.
Article reviewed: August 2024