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Overview: What’s the Difference Between EU VAT vs. OSS VAT

EU VAT vs. OSS (One Stop Shop) VAT

The EU VAT vs. OSS (One Stop Shop) VAT is a complicated topic, but it is essential to understand their differences. If you have ever wondered what the difference is between these two taxes, this post will help clear things up!

The main difference between EU VAT and OSS (One Stop Shop VAT) is that with the EU VAT system, businesses have to register for VAT in every member state in which they trade. If you sell goods or services to customers in more than one EU member state, you must register for VAT in each state in order to collect local VAT. OSS scheme allows the companies to register only for one country and collect local VAT based on the customer location for B2C sales on distance selling or digital goods

What is EU VAT?

EU VAT is a tax on goods or services supplied within the European Union. It was introduced in 1993 as part of the EU Single Market, and all member states have adopted it except Denmark, Romania, Bulgaria, Croatia, and Cyprus (which joined the European Union in 2007). It is a tax that you collect on local or distance sales in the European Union. The VAT charged varies depending on the customer’s country, so it can be quite complicated to calculate and administer.

What is OSS?

OSS stands for One Stop Shop. This refers to an arrangement allowing businesses to submit single return on quarterly basis to account for all their B2C sales from multiple European countries. The concept was designed to streamline operations for businesses that had been previously exempt from local taxes due to their small size or low turnover levels but needed more time than usual to prepare for changes like these brought about by globalization trends and increasing competition. With OSS (One Stop Shop VAT), you only need to register for VAT in one EU member state – the one where your EU business has its head office. Or if you are non-EU based company, you can choose the EU member state on your own. You will then be able to collect the taxes due in all other member states from the final consumers who buy online or over the phone.

How does it work?

The OSS works by allowing businesses to register for VAT in one country and then submit a united VAT declaration covering all their B2C sales inside the European Union. The local tax authority office will redistribute your collected VAT to other European Union members based on your return.

Depending on your circumstances, it can be worth speaking to tax experts. Please keep in mind that 1stopVAT’s team is always at your disposal and ready to share the up-to-date information on all VAT-related questions.