VAT registrations, why are there so many?
A practical guide to OSS, VAT registration, IOSS, and the non-Union scheme.
Before the 1st of July, there was a single VAT registration for each country required once the sales exceeded a country specific threshold. Sounds simple, but in reality, for anyone serious about their business it was VERY expensive and created a significant barrier to an actual single EU market.
After all, if you sold at any significant quantity you had to register for VAT, often with fiscal representative, and provide full reporting, and for the other countries, you had to monitor your thresholds in order not to incur the potentially significant liabilities.
Let’s start with the simplest one: OSS
OSS is used for intra-EU sales, it is applicable for goods stored in the EU at the time of sale. In other words, they have been imported to a warehouse in EU or manufactured in EU.
The registration for OSS is done in the country of registration of your company. Straightforward with quarterly reporting at the already familiar tax office portal you have used so far.
VAT registration
VAT registration is a bit more complicated but again nothing to worry about. VAT registration has to happen if you store goods in another country, still and regardless of whether you have exceeded VAT sales threshold in EU.
The most common occurrence of this is when one uses Fulfillment centres like FBA (Fulfillment by Amazon). So contrary to the initial VAT registration, this registration with the same name has nothing to do with the sales threshold.
With the new regulation, once you go over the sales threshold in one country you are liable for VAT everywhere in the EU. VAT reporting period varies from one country to another. Some countries require you to appoint a Fiscal Representative if you are not incorporated or don’t have a fixed establishment in the EU.
The fixed establishment lies somewhere between VAT registration and full incorporation. You are liable for full accounting, unlike with VAT registration. You are required to register and pay income tax in that country.
You will be considered to have a fixed establishment if, for example when you directly rent or own your own warehouse or other premises, or employ staff in the country.
IOSS
IOSS is needed if you deliver goods valued below 150€, to customers in the EU from outside the EU. This is regardless of where you are registered, in the EU or outside of the EU.
Sales thresholds do not apply as VAT must be collected on all EU sales, IOSS is just the most customer-friendly and efficient way to do it.
If you are incorporated or have a fixed establishment in the EU, the registration is simple: just register at your national tax office. If you are not incorporated in the EU or only have VAT registration, you have to appoint an Intermediary for IOSS.
Then there is the non-Union scheme
Then there is the non-Union scheme for digital goods. It is the rarest and we have a whole section for it here: Non-Union Scheme: what kind of animal is it?
Ok, it is a jungle, no denying it.
EAS helps you with all registrations and can act as an intermediary for IOSS users.
EAS also automates the tax reporting for your EU sales.
Get in touch with us, you’ll be fine!
Q&A
1. How do I know which one is for me?
Book a meeting with us if you are unsure. Don’t guess. We are happy to help.
2. What if I register for the wrong one?
Decision to register for VAT in another country should never be taken lightly. It will expose you to liabilities and costs for a period of time, inevitably. It can be cancelled, but it will not happen immediately.
If you don’t fulfil goods from outside of EU directly to end-customers, IOSS is not for you. IOSS cancellation depends on who you are working with.
You CAN change your IOSS service provider before the 3 month cancellation is over.
OSS and non-Union are a final report and a cancellation.
3. Can I register for the EU VAT schemes in UK?
No. Brexit, remember.
Need help choosing the right VAT registration?
EAS helps with OSS, IOSS, non-Union OSS, VAT registrations, and automated EU tax reporting.