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Owning Business Outside EU: Here’s What You Should Know About Tax

Since July 2021, the EU has a special VAT package in place to simplify e-commerce tax administration. The package includes one-stop-shop solutions like OSS — One Stop Shop and IOSS — Import One Stop Shop. A special solution is dedicated to companies based outside the EU — the Non-Union OSS.

You can learn more about the schemes by reading our guides. Click here to access OSS and IOSS guides.

The eligibility for these schemes derives from the types and value of goods sold, as well as the location of the sale. Even though the schemes are optional, many sellers benefit from the simpler VAT registration and submission as they allow single VAT registration and returns for the entire EU.

Perhaps the most important for foreign sellers is the Non-Union OSS scheme which allows accounting for all European B2C services VAT via a single VAT registration. The standard OSS scheme is also available for third-country sellers that wish to account for Intra-EU supplies of B2C goods. At the same time, IOSS allows accounting for low-value (below €150) goods shipped from outside the EU.

Tips for beginning sales in the EU:

  1. If you want to benefit from the IOSS and OSS schemes, it is worth partnering with couriers and representatives that are knowledgeable about various customs fees and VAT regimes. It might be best if the courier could act as your customs representative.
  2. Find trustworthy accounting partners. After reaching a certain turnover, you will have to register for VAT, and if you’re selling in multiple European countries, things can get complicated. An experienced tax consultant will make your accounting procedures easy and effective.
  3. Familiarize yourself with European VAT rules. Different European countries have varied regulations for VAT registrations and, most of the time, require appointing a fiscal representative from the country. This representative is then responsible for managing your VAT and other taxation-related issues.
  4. Do not delay registering for VAT. A missed VAT registration deadline in Europe can result in severe fines. While registering for VAT allows for deductions and more transparency.
  5. If you wish to register for OSS, you should communicate this to your fiscal representative in the country of identification. After registering for OSS in that country, you will be able to access VAT in all European countries.

The rules above apply to companies from the UK, the US, or other countries. However, it is important to note that many countries require a separate VAT registration if warehouses are owned or used in their territory.

We understand that navigating VAT in the EU as a foreign business owner can be difficult. This is why the 1stopVAT team serves as the primary consultant for individuals and companies that wish to simplify their accounting by implementing best practices in most countries across the globe. So reach out to us to receive an individual consultation about which solutions work for you best.