One Stop Shop (OSS) for e-commerce in the European Union

From last Thursday, July the 1srt, and after delaying its entry into force due to the health crisis of the COVID-19, the One Stop Shop (OSS) System applicable to e-commerce enters into force in the Member States of the European Union. To date, this system has only been applied to Electronically Supplied Services (ESS) through the MOSS system.

First of all, it should be highlighted that this new system simplifies the tax regime of online sales: the supplier that materializes online sales charges VAT to the country of destination (when the sales exceed 10.000.-€ annual turnover in the EU, being the unified criterion) without taking into account the previous requirements of tax representation in each Member State or of the different economic scales of each jurisdiction.

In this sense, VAT records are simplified through the One Stop Shop procedure: e-commerce companies will only have to make one registration for their “Identification Status”. Consequently, for employers with a registered office in one of the Member States of the European Union, the State of identification will be the same State as the State where the registered office is located. However, for companies established outside the European Union, their State of identification will be the State from which they make intracommunity deliveries.

In other words, the foreseeable consequences of this new system for employers are: first, a great simplification of the procedures and formalities (and consequently, of the costs associated to the identification and to the tax representation) previously required by VAT registration, since the employer can be registered in a single Member State for all the intracommunity deliveries. Second, as this registration is carried out in a single Member State, the VAT return is also unique: it will only be necessary to submit it to the State of identification of the employer for all the deliveries made within the European Union. Similarly, the accrued VAT will be settled through a single payment determined by this single declaration.

Therefore, Andorran entrepreneurs engaged in e-commerce who make deliveries to any State of the European Union will only have to register in one Member State of the Union and pay the VAT accrued in that same State.

This is undoubtedly an evolution of great relevance to simplify the procedures for intracommunity operators (regardless of whether they are located outside the Union) which, in turn, makes it possible for those parties to comply with their formal obligations, especially for these entities that, with the previous system, could have found a real barrier to the entry of the market because of its high cost.

Marcos Sutil

Tax Departament