The VAT One-Stop-Shop (OSS) procedure has become an integral part of cross-border e-commerce taxation within the EU, simplifying VAT compliance for businesses engaged in cross-border sales. As we enter 2024, it is important to understand the current regulatory framework and its application in Germany.
Legal Basis for OSS in Germany
The legal foundation for the OSS procedure in Germany is primarily established in the EU VAT Directive (Directive 2006/112/EC), specifically in Articles 369a to 369x. At the national level, these provisions have been implemented into German law under the German Value Added Tax Act (Umsatzsteuergesetz, UStG):
- § 18j UStG governs the OSS registration and reporting procedures.
- § 3c UStG outlines the VAT treatment of cross-border supplies to consumers (B2C transactions).
- § 16 UStG covers VAT declarations and remittances under the OSS.
These legal provisions aim to reduce administrative burdens for businesses while ensuring the proper collection of VAT on B2C transactions across EU member states.
Who Is Eligible for OSS?
The OSS procedure is available to:
- EU Businesses: Selling goods or services to private consumers (B2C) in other EU member states.
- Non-EU Businesses: Selling goods to EU consumers where goods are stored within the EU or providing certain services to EU consumers.
The procedure applies to:
- Distance Selling of Goods: Cross-border sales of goods to private customers within the EU.
- Digital Services: Including telecommunications, broadcasting, and electronic services.
- Certain Other Services: Such as accommodation services provided in another EU member state.
For businesses utilizing OSS, the €10,000 EU-wide threshold for intra-EU distance sales and digital services is critical. Once this threshold is exceeded, businesses are required to register for OSS.
How the OSS Procedure Works
- Registration: Businesses must register for OSS in the EU member state where they are established. Non-EU businesses may choose any EU member state for registration. In Germany, this is done via the Federal Central Tax Office (Bundeszentralamt für Steuern, BZSt).
- VAT Reporting: Through OSS, businesses can submit a single quarterly VAT return to the BZSt, covering all eligible cross-border B2C transactions within the EU.
- Payment of VAT: The VAT owed for sales in different member states is consolidated and paid to the tax office in the country of registration. The tax authorities then distribute the VAT to the respective member states.
- Simplified Record-Keeping: Businesses are required to maintain records of all transactions declared via OSS for at least 10 years.
Benefits and Challenges of OSS in 2024
Benefits:
- Simplifies compliance by eliminating the need for VAT registration in multiple EU countries.
- Reduces administrative costs and centralizes VAT reporting.
- Enhances transparency for businesses and tax authorities.
Challenges:
- Maintaining accurate records for multiple jurisdictions.
- Understanding and applying different VAT rates in EU member states.
- Keeping up with changes to EU VAT regulations, such as updates to thresholds or reporting requirements.
Recent Developments in Germany for 2024
In 2024, no significant legislative changes have been made to the OSS system itself. However, German authorities have placed increased emphasis on digital transformation and the efficiency of the OSS registration and reporting process via the BZSt online portal. Businesses are encouraged to utilize the enhanced digital tools provided for VAT compliance.
Conclusion
The VAT OSS procedure remains a powerful tool for simplifying VAT compliance in the EU. In Germany, § 18j UStG and related provisions provide the legal foundation for OSS registration and reporting. Businesses involved in cross-border B2C sales can benefit greatly from the streamlined reporting system, provided they remain vigilant in understanding and applying EU-wide VAT rules.
For further questions about the VAT OSS procedure in Germany or assistance with your VAT compliance, feel free to contact us at info@vat-germany.com. Our experts at WW+KN, a Baker Tilly Company, are here to help!
