Special tax arrangement OSS
One Stop Shop
Special tax arrangement OSS – One Stop Shop is for businesses that sell goods or services (e.g. e-shops) to end consumers in other EU countries. Thanks to the OSS, the trader will no longer have to register separately in each country once the limit has been exceeded – just register with the OSS.
The special OSS tax treatment applies to:
- distance selling within the EU so-called “mail order” or “online sales” or “internet sales” of goods supplied to customers where the supplier is not established in the customer’s Member State
- the sale of goods through the use of an e-commerce interface, such as an electronic marketplace, electronic platform, electronic portal or similar electronic means, if the supplier is a person not established in the EU
- the service providing, which have a place of supply in the EU, as defined in Article 16 of the VAT Act, to non-taxable persons from Member States where the supplier is not established.
There are also exceptions to the special tax arrangement, e.g.: distance sales of goods sent directly from third countries to a customer in an EU Member State, sales of goods to persons identified for VAT, sales of new means of transport (motor vehicles, vessels and aircraft).
The special OSS tax arrangement has two schemes depending on who is affected:
- Scheme for the EU (service providers established in the EU, remote suppliers of goods within the EU, e-commerce)
- scheme outside the EU, which applies only to service providers established outside the EU.
Use of the special tax arrangement OSS is not compulsory, but voluntary, however, if the service provider, the distance supplier of goods in the EU or the person deemed to be the distance supplier of goods in the EU chooses it, he is obliged to apply it in full. Exploitation also has certain benefits: registering for the special OSS tax scheme electronically in one Member State, filing one electronic tax return, cooperating with the tax administration of the Member State in one language.
Reason for the introduction of the special OSS tax arrangement:
The reason for the introduction of the special OSS tax arrangement is the same treatment and procedure for each EU Member State, as from 01.07.2021 changes the value of goods supplied at a distance within the EU for which the supplier is obliged to register for VAT, file returns and pay tax in each Member State of the customer; extends circle of persons, to be subject to the same regime as for distance suppliers of goods within the EU; extends range of services, for which the provider will not have to register for VAT, file tax returns and pay tax in each Member State.
The manufacturer produces natural cosmetics, By the end of May 2021, he delivered products to Austria for 9,000 euros, to the Czech Republic for 1,000 euros and to Poland for 5,000 euros. In neither country did he exceed the consignment limit set by the Member State. As the total value of the goods supplied by mail order already exceeded EUR 10 000 in the calendar year in May 2021, the manufacturer is obliged to register for VAT in the Member State concerned after01.07.2021 before the first supply of goods to a citizen in the Member State concerned. However, the manufacturer may avoid registration in other Member States by applying the special OSS tax treatment to such supplies after 01.07.2021.
A domestic service provider, a domestic supplier of goods at a distance and a domestic operator of an electronic interface subject to the OSS must register for the special OSS tax treatment in the domestic country. If the taxable person opts for the special scheme for the OSS, he/she shall do so via the portal www.financnasprava.sk. The tax office will assess the application for registration of OSS and notify the applicant of the result electronically – to the email address provided in the registration form.
The tax office will cancel the registration for OSS:
following a request for deregistration from a taxable person who has decided not to apply the OSS; on the assumption that the taxable person has ceased to carry out an activity covered by the OSS; where the taxable person does not meet the conditions for applying the OSS in the Member State of identification, e.g. by changing its registered office; where the taxable person repeatedly breaches the conditions for applying the OSS, e.g. by failing to file OSS tax returns.
Filing tax returns and paying tax
The tax period is the calendar quarter. The Member State of identification shall split the OSS return by Member State of consumption and send the data to the Member States of consumption concerned.
The OSS tax return includes:
the total value of goods and services, net of tax, supplied in the tax period; the rate of tax and the amount of tax for each rate of tax, broken down by Member State of consumption; the total amount of tax payable, including supplies of goods or services where the service is supplied or the goods are dispatched or transported from Member States other than the Member State in which the supplier is established and identified for OSS.
Once the OSS tax return has been filed, payment instructions will be sent to the message box and to the email address provided in the registration form to make payment of the tax due, which is paid in one lump sum for all Member States of consumption (of the customer), i.e. the total amount of the filed OSS tax return is paid. The total tax liability shall be paid in euro and shall be payable at the latest by the end of the period for filing the tax return, with a reference to the payment instructions sent for the relevant tax return filed.
Invoicing and recording obligations for VAT purposes
The rules of the Member State of identification shall apply to the establishment of invoices. As the control of the correctness of taxation is carried out by the individual Member States of consumption, the domestic service provider or distance supplier of goods should have verified what invoicing rules apply in the Member State of consumption.
The tax entity shall keep records of goods and services supplied under the special tax treatment of the OSS, which must also include the following information:
- the Member State of consumption to which the goods or services were supplied,
- the type of services or description and quantity of goods supplied,
- the date of delivery of the goods or services, as well as the date and amount of payments received, including payment before delivery of the goods or services,
- the tax base, the VAT rate applied, the amount of VAT payable and the currency used,
- any subsequent increase or decrease in the tax base,
- the information used to determine where the customer is established,
- any proof of any return of goods, including the taxable amount and the VAT rate applied.