One Stop Shop regime

Authors: Andrea Kleinová, Barbora Halousková
The Mini One Stop Shop, or shortly MOSS, has been in place since 2015 within the European Union, but only for a small section of specific services, namely electronic services, telecommunications services and radio and television broadcasting services provided to a non-taxable person (i.e. typically a final consumer - a non-entrepreneur). In principle, an entity that provides the above-mentioned services to final customers within the EU does not have to register for VAT in the individual countries to which it provides the service, but only registers in one EU Member State. 

From this year on, the possibility of using this regime is extended by:

  • sellers of goods (with the exception of personal cars and the delivery of goods with assembly or installation) to final customers in the EU (i.e. in principle the regime currently known as distance selling of goods),
  • service providers to end customers in the EU (in general all services, including, for example, the organization of cultural events or trade fairs and the sale of tickets for these events, services related to vehicle rental or real estate), and
  • operators of an electronic interface enabling the sale of goods of other sellers (this is the so-called e-commerce, e.g. within e-bay).

As a result of this expansion, the Mini One Stop Shop mode becomes "only" the One Stop Shop mode.

We can summarize that the OSS regime applies only to so-called B2C (business-to-customer) transactions, i.e. those where the customer is a non-taxable person or end customer.

The OSS will operate in three sub-modes:

  • the EU regime for persons with a registered office or fixed establishment in the EU, applicable to the distance sale of goods between EU Member States, the provision of services to end customers within the EU and for e-commerce operators,
  • an import regime for persons with a registered office or fixed establishment in the EU or for persons with a registered office or fixed establishment outside the EU represented by a VAT representative, applicable to the distance selling of imported goods from a third country directly to the final consumer in the EU up to the value of EUR 150, and
  • a non-EU regime for persons with a registered office or fixed establishment outside the EU, applicable to the provision of a service by a non-EU provider to a non-taxable person (i.e. again to the final consumer) in the EU.

Simultaneously with the above-described change, the exemption for the import of small value goods deliveries (up to EUR 22) will be abolished as of 1 July 2021. In case of small value goods deliveries (up to 150 euros), it will be possible to apply the OSS regime or the new regime for low value imports. Goods over EUR 150 will have to go through the proper customs procedure and therefore, it will not be possible to apply the OSS regime to them.

Distance sale of goods

Let's have a look at the application of the OSS regime on the example of distance selling of goods to end customers within the EU. Up until now, the seller was obliged to register in each individual EU Member State once the given turnover was exceeded, i.e. the total value of goods sent to that country, while each country has set up its own limit (e.g. the limit for sending goods to the Czech Republic is CZK 1,140,000). Until this limit was not exceeded, the seller applied (and still applies) VAT according to the rules of his home state.

Newly, under the OSS regime, such seller will have a possibility to register only in its home country if the total turnover for all countries of EUR 10,000 (or the national currency equivalent of this amount set by the European Central Bank as of 5 December 2017) will be exceeded.

For a better illustration, we have prepared a table of selected currencies of the EU Member States and the United Kingdom for you.

State Currency Currency code EUR Exchange rate
Bulgaria Bulgarian lev BGN 1 1,9558
Czechia Czech crown CZK 1 26,653
Denmark Danish krone DKK 1 7,4415
Croatia Croatian kuna HRK 1 7,5543
Hungary Hungarian forint HUF 1 313,96
Poland Polish zloty PLN 1 4,202
Romania Romanian lei RON 1 4,6337
Great Britain British pound GBP 1 0,88183

Source: https://www.ecb.europa.eu/stats/exchange/eurofxref/shared/pdf/2017/12/20171205.pdf

The OSS therefore unifies the conditions for the particular entities and simplifies doing business in the EU. Newly, the limits for individual EU Member States are not decisive; however, this value is monitored in total, both for all countries and for all types of supplies (goods and services, as listed above).

Obligations of the entity

At the beginning, we would like to emphasize that the registration to the OSS regime is not an obligation, but rather an option to avoid registration in each individual EU Member State where the entity concerned supplies its goods or services to final customers.

However, the entity is required to keep records for VAT purposes, indicating the values of those goods and services, individually by each EU Member State. Based on this ratio, the financial administrations of the individual countries will redistribute VAT revenues among themselves.

Taxable persons with a valid VAT registration have an opportunity to register for the regime as early as 1 April 2021, while the planned introduction in practice is set for 1 July 2021.

In the Czech Republic, the tax administrator in relation to the OSS regime is the Tax Office for the South Moravian Region, the territorial office for Brno I.

The entity will not only register with this tax administrator but will also file a quarterly VAT return in the European form and pay tax resulting from the relevant regime. However, this form does not replace the classic VAT reports, it is only a supplement to it for the given regime.

Another change concerns the deadline for submission of tax returns within the OSS regime, which will be extended until the end of the following calendar month. The quantification of the tax will also undergo a minor change and will be done in euros, rounded to two decimal places. The new conditions will also apply to corrections, where these will be part of the following proper declaration.

However, we would like to draw your attention to the fact that even if you will be registered within OSS regime only in the Czech Republic and you will also file only one form, invoices issued in OSS regime have to be issued with the VAT rate valid in the country of consumption, i.e. the country of the final customer.

If you are now wondering if this regime would be beneficial for you, do not hesitate to contact us. We will be happy to discuss your situation with you, consider the pros and cons, and if you decide to use this option, we will be happy to help you with the registration process and subsequently with the submission of a return.

Contact our expert

Andrea Kleinová
Andrea Kleinová
Certified Tax Advisor

Tax Advisory