OSS, IOSS: outsource your VAT One-Stop-Shop’s management

Yes, the threshold in force since July 1^st, 2021 is a global threshold for all countries of the European Union. Regardless of the turnover per Member State, if the total turnover exceeds 10,000 euros per year, the seller must necessarily collect VAT from the country of destination on the sales made. The seller will then be able to choose for the one-stop shop in his country of residence or to identify himself for VAT in the countries of sale if he does not wish to go through the one-stop shop.

No, the 10,000 euro threshold is only applicable to intra-Community distance sales. In other words, this threshold only applies to goods that are sent to end customers from a European point of departure. For distance sales of imported goods, there is no threshold. VAT is due in the country of destination from the first transaction. IOSS provides a simplified process for sellers who will be able to collect each of the EU VAT rates through a single access point. Another advantage to this solution is that the seller will not have to pay import VAT.

The choice depends on the physical flow of goods, regardless of the nationality of the seller. Thus, if sales are from a stock in the European Union to customers also in the EU, they must be considered as intra-Community distance sales. The seller will have to register to the EU OSS in the country of the goods departure. (here France), to report sales through a fiscal representative. The seller will have to register to IOSS only if the physical flow comes directly from a country outside the European Union.

The IOSS one-stop shop is, for the time being, only accessible for flows from a third country to European end customers for a value of less than EUR 150. This is the value of the package. So, if you sell three goods and make a package, it will be the value of the package and not the value of each of the goods. To benefit from IOSS, the value of the three products combined must be less than 150 EUR.

As for transportation costs, it depends on how you present your invoice. If the transportation costs are isolated on a separate line, they will not be taken into account for the calculation of the 150 EUR threshold. On the other hand, if the shipping costs are included in the price of the item, they will be taken into account in the calculation of the threshold.

For intra-EU distance selling, it is the European seller who is liable for VAT regardless of the sales channel. It is only for sellers based outside the EU that facilitating platforms have become liable for VAT on these intra-EU sales. However, for distance sales of imported goods worth less than EUR 150, the marketplace is responsible for the VAT, also for EU sellers. It is therefore essential to control your flows in order not to pay VAT twice.

For this situation, the simplification will apply but not completely. Indeed, the reform does not yet simplify the rules that apply to storage. If an e-tailer stores or uses the stock of a maketplace in another EU country, a VAT registration in that country is still required. The seller must have a VAT number in the country of storage. For sales made from the country of storage to an end customer in that same country, VAT will be paid through the local VAT number. However, for sales made from the country of storage to a final customer in another country of the European Union, VAT will be paid via the one-stop shop.