OSS, IOSS & Beyond: Lessons Learned, CESOP Pressure, and the ViDA Horizon

Since its implementation in July 2021, the European One Stop Shop (OSS) was hailed as a major simplification for ecommerce companies involved in cross-border sales of both goods and services. In practice though, the reality is more balanced. The OSS isn’t a single scheme, there are actually 3 of them : the OSS EU scheme, the OSS non-EU scheme and the Import OSS (IOSS). Each of these regimes has its own scope, conditions, and registration process. 

Choosing the right scheme, identifying the correct portal and determining who is responsible for collecting and remitting VAT requires careful analysis. In some cases, a single business may need to register through multiple portals simultaneously to remain fully compliant. What was meant to be a unified system can quickly turn into a web of overlapping obligations. Worse still, non-compliance can lead to exclusion from the regime altogether. 

Late filings, late or missing payments or repeated unintentional omissions may result in a loss of access to OSS or IOSS regimes forcing a company to register for VAT purposes as pre-OSS. After several years hands on deck, let’s take a step back and analyse how OSS and IOSS have performed highlighting the ongoing challenges and explore how recent and upcoming initiatives like Cesop and ViDA are likely to reshape the VAT landscape once more.

From theory to practice : when the OSS works and when it … doesn’t

Before digging further, let’s get one thing straight : knowing which portal to use for which type of transactions.

For many businesses, the OSS reform has lived up to its promises: simplified reporting, fewer VAT registrations across Member States and a more consistent compliance framework. The companies that have truly benefited are typically those selling digital services or those dispatching goods directly from their home country. The ability to remove VAT registrations and rely on a centralised OSS filing to ensure an EU-wide VAT compliance solution was a major step forward.

However, this picture-perfect scenario is not music to every company’s ears. For companies using fulfilment centres in other EU Member States, the OSS falls short. Local VAT numbers are still required to ensure compliance. In today’s economy where delivery time and cost efficiency are key competitive drivers, decentralising stock is not a choice, it is a necessity. This strategy, meant to improve performance, triggers a new layer of VAT obligations though.

Despite its promise of simplification, OSS doesn’t spare businesses from complexity when local VAT registrations are still part of the equation. Certain transactions simply fall outside its scope :

• movements of stocks,
• domestic sales from local warehouses,
• Intra-Community supply of goods from the country of storage.

In practice, OSS and traditional VAT registrations must be managed in parallel; a setup that brings more complexity than clarity.

Correcting OSS returns is another major stumbling block. Wen mistakes occur, adjustments aren’t always straightforward and can result in a VAT imbalance. A company may find itself paying VAT in a given country while simultaneously waiting on a refund from the same country due to a correction. In some cases, this leads to significant cash flow issues especially when VAT refund procedures are lengthy and require communication in the country’s local language.

What’s more, OSS only covers the payment of VAT, not its deduction. Input VAT incurred in Member States cannot be recovered through the OSS return. Businesses must fall back on traditional refund mechanisms, which are often lengthy, inconsistent, and far from centralised. The idea of simplification quickly fades when companies must still engage directly with multiple Tax Authorities to recover their VAT. OSS was meant to break down VAT barriers, yet businesses find themselves juggling multiple systems.  

The IOSS scheme comes with its own constraints. Designed to simplify VAT collection on consignment with a value lower than €150, it excludes any shipment above this threshold. This leaves businesses with a fragmented process where some sales are managed through the IOSS, while others require local import VAT payment and possibly local VAT registrations. The sales channel itself can shift the VAT liability. If a low-value distance sales of imported goods is carried out through a marketplace, the platform must report and remit VAT instead of the seller. This creates further confusion for businesses trying to determine who’s responsible, and through which system, for each sale. For esellers, the IOSS is less of a universal solution and more of a selective tool with a narrow scope and many conditions attached.

The Monaco exception : when “France” doesn’t mean OSS

One of the most surprising limitations of the OSS system concerns Monaco. Although Monaco and France are treated as a single territory for VAT purposes, their Tax Authorities, IT systems, VAT registrations and ongoing compliance remain entirely separate. In practice, this leads to two major consequences for businesses:

• Businesses established in Monaco : While they must still comply with the new ecommerce package and the €10,000 annual threshold, they cannot use the French OSS portal since Monaco has not implemented a similar solution. These businesses must register for VAT in each Member State where they carry out Intra-Community distance sales of goods.
• Businesses selling to private consumers based in Monaco : The situation is equally complex on this side. When companies sell to private consumers in Monaco, they should not treat these sales as French sales or report them via the OSS. Instead, they must register for VAT purposes in Monaco to ensure proper VAT remittance.

The result? Added complexity, potential registration requirements and a need to manage exceptions within a system that was supposed to centralise everything.  

CESOP : the rise of VAT scrutiny

While the OSS was designed to ease reporting obligations, the EU is simultaneously ramping up control mechanisms most notably through the latest CESOP directive. Since January 2024, payment service providers are now required to report cross-border transaction data to Tax Authorities, feeding a centralised EU-wide database aimed at detecting VAT fraud.

This is far from theoretical. Over the past few years, we’ve seen more and more companies being audited by Tax Authorities in the customer’s country even for transactions dating back several years. Why? Because the VAT statute of limitations varies from one Member State to another and the period before OSS went live remains a fertile ground for audits. Even post-OSS, controls persist, especially for companies that haven’t yet opted into the scheme.

Until now, payment platforms like Stripe were already sharing some transactional data on a voluntary or risk-based basis. With CESOP, this reporting is now mandatory and the number of investigations is expected to rise accordingly.One of our clients, for instance, saw their bank temporarily block transfers because they were not yet registered under OSS. The bank pointed to their own CESOP compliance obligations to justify the action. This illustrates a major shift: CESOP is not just a tax topic; it is becoming a financial compliance issue with real operational consequences.

When simplification turns into exclusion

One lesser-known but impactful aspect of the OSS and IOSS regimes is the possibility of being excluded. While these schemes were designed to reduce compliance burdens, they also come with strict obligations and the margin for error is slim. A company that fails to submit its returns, misses  payments, or files incorrect data can be removed from the scheme altogether. Once excluded, re-entry is off the table for two years.
We’ve seen several real-life cases where the exclusion resulted not from fraud or deliberate non-compliance, but from basic misunderstandings: a company that activated all portals without knowing why and failed to file nil returns, another that assumed their accountant was handling things while the accountant believed the client was. In the end, simple mistakes can have major consequences, forcing companies back into the more rigid and costly local VAT registration frameworks.

The paradox is hard to ignore: OSS was introduced as a simplification tool, yet those who need simplification the most like small businesses, fast-growing ecommerce players, or companies new to EU VAT rules are also the most vulnerable to these pitfalls. Once excluded, they face more complexity, not less.

ViDA and the  Single VAT Registration : not quite the “one-size fits all” solution

The VAT in the Digital Age (ViDA) Directive was introduced with the ambition of bringing VAT compliance into the 21st century. One of its pillars, the so-called “Single VAT Registration,” is presented as a major simplification tool, aiming to drastically reduce the need for multiple VAT numbers across the EU. On paper, it almost sounds like the promise of a single VAT number to cover all transactions. In practice, that’s not quite the case. The Single VAT Registration under ViDA is not a universal VAT number; it may help limit new VAT registrations in some cases, but it won’t eliminate them altogether.

For instance, companies storing goods in other Member States might no longer need to keep local VAT numbers, and the extended OSS may offer some relief. While that sounds promising, the devil hides in the details. Depending on where goods are shipped from before being stored, VAT registration may still be required. Beyond that, the line between B2C and B2B has blurred in recent years. Many ecommerce sellers now operate hybrid models, with B2B sales making up a significant share of their turnover. For those players, ViDA may fall short in easing day-to-day compliance burdens.

While the Directive certainly marks a step forward, it doesn’t yet deliver a fully integrated VAT system. With implementation not expected before 2028, its real-world limitations may only become clearer over time.

Navigating complexity with the right partner

Despite all efforts toward simplification, EU VAT compliance remains a complex landscape especially for businesses operating cross-border, selling through multiple channels, or managing stock in various countries. From choosing the right portal, reporting accurately, or preparing for audits under CESOP, the margin for error is slim and the cost of mistakes, significant.

At Easytax, we help businesses make sense of it all. We can map your flows to identify VAT obligations, manage OSS or IOSS filings, handle local VAT registrations where needed, or simply offer clarity and reassurance when a tax audit is looming. Whether you’re scaling across Europe or just trying to stay compliant, our team is here to support you with clear answers, hands-on expertise, and peace of mind.