Digital Services VAT in the EU: Non-Union OSS

The EU introduced the OSS (One Stop Shop) scheme as a way to simplify VAT reporting for digital services sold by foreign businesses to consumers in the EU. If you are established outside of the EU, the non-Union OSS scheme will apply. Instead of registering for VAT in each EU member state, you can register for the OSS scheme in one EU country and report all your EU digital sales through a single VAT return. This also means that payment will be made to one EU country, and that country will then ensure all other EU member countries receive their correctly apportioned VAT. In the non-union OSS scheme, you don’t need to have any physical presence in the EU, which makes it the perfect scheme to use when reporting sales of digital products.

While the non-Union OSS scheme reduces the administrative burden of multiple registrations and filings, it also requires compliance with all applicable VAT rates in the EU. This means that when you sell a product to a German customer, VAT has to be collected and paid using the German VAT rate (19%). If you sell a product to a French customer, the French VAT rate (20%) has to be applied, and so on for each member state.

FAQ

Can I report VAT on B2B sales through OSS?

No, the OSS scheme can only be used to report VAT on B2C transactions. At the same time, the responsibility to report B2B transactions from foreign suppliers falls upon the buyer with the reverse charge mechanism. You may check this article for more information about B2B sales and reverse charge.

Do I still need a local VAT registration in the EU to register for the non-Union OSS scheme?

No, since the non-Union OSS scheme doesn’t require physical presence in the EU, you do not need to have a local VAT registration, only the OSS one.