As you will undoubtedly know by now, the EU VAT reforms for ecommerce are fast approaching. When it comes to the upcoming EU Ecommerce VAT Package, the One-Stop Shop (OSS) and Import One-Stop Shop (IOSS) are certainly two of the most important reforms for you to be aware of. Both these initiatives will transform the ecommerce landscape in Europe forever and so you need to be prepared. Whether you are selling your products through Amazon or not, and regardless of whether you are based in the EU or not, the information in this article will be vital for any ecommerce seller who wishes to make the most of their time and money when selling in the EU.
What Are The OSS And The IOSS?
One of the main ways that the upcoming EU Ecommerce VAT package is hoping to streamline ecommerce selling is the removal of distance selling threshold. To replace this rule, the EU are launching the One-Stop Shop.
From the 1st July 2021, rather than registering for VAT in every individual country in which you make sales, you will be able to register for the OSS which will allow you to submit a single VAT return quarterly, listing all pan-EU sales.
To use the OSS though you will need to be VAT registered in at least one EU state. You will also have to remain registered in every EU state in which you store goods. Thus, it makes sense for you to store goods in the same country in which you have registered for VAT. Of course, if you are an EU seller this will likely be your country of residence.
Even if you are not based in the EU, you can still register for this scheme and use, but you will have to have a European EORI number and be registered for VAT in an EU state.
The IOSS is a slightly different as it is specifically designed for the sale of “low value” goods (not exceeding €150) from outside the EU to buyers inside the EU. Under this mechanism, a supplier (or deemed supplier) may elect to register – via an intermediary for non-EU suppliers – for IOSS in a single Member State and collect VAT in the respective EU country of destination and remit monthly IOSS VAT returns in support. Of course, for those of you are holding stock in the EU already, you will not need to register for the IOSS scheme.
What Does The OSS & IOSS Mean For Amazon Sellers?
Regular readers of this blog will be aware of the new VAT obligations that the EU Ecommerce VAT Package will place on Online Marketplaces so we will not go into detail on the topic again in this article (although you can find more information of that topic here). However, the main thing you need to be aware of is that Amazon will be liable to account for the VAT on Pan-EU sales when the goods are stored in Europe and have a consignment value less than 150 euros.
It is likely that Amazon will use the OSS themselves, and will likely give you their registration number for the OSS to use on your tax returns. You should have your own registration for sales that are above the threshold of 150 euros.
Further, don’t forget that you will still be required to register for VAT in each of the countries where fulfilment warehouses are located. This includes Amazon FBA warehouses.
You would also do well to remember that Amazon are no longer offering cross-border fulfilment between the UK and the EU. This is where the IOSS will come in handy. However, if you have not already split your inventory between the UK and the EU, you should strongly consider doing so. We have an article specifically related to how the OSS will affect marketplace sellers.
Conclusion
Evidently, both EU and non-EU sellers will benefit from reduced VAT obligations. You may be able to deregister in some EU states, as long as you have a physical presence in one, such as an office or warehouse (you will have to remain registered in this state). You will also have to remain registered in any state where you hold stock, or whenever you make sales over 150 euro, since only sales under 150 are covered by the OSS. Due to these restrictions, please think very carefully before considering deregistering in any EU State.
Each EU Member State will have an online OSS portal where businesses can register from 1 April 2021! Want to find out how to register? Read our article for registering for the OSS by following the link.
Don’t forget our long history of working with ecommerce sellers, especially those who use Amazon and eBay, means we can offer you expert advice – so please do not hesitate to give us a call on 0161 637 1080 or send an e-mail to enquiries@jpaccountant.com. As well as help with the upcoming EU Ecommerce VAT Package, we would be more than happy to help you register for UK & EU VAT, the UK VAT deferral scheme, EU and UK EORI number, file your UK & EU VAT returns, and help you comply with VAT in case your account faces any issues.
