New VAT rules for distance sales (“e-commerce”) starting 1 July 2021
We are presenting you a series of articles about innovations in e-commerce distance sales. In this article, we describe the basic matters related to OSS mode.
Who can use the OSS special mode?
• E-shop owners: distance sales of goods via e-shop to end consumers of the European Union, individuals (B2C)
• Companies and entrepreneurs that provide services to individuals from other EU countries
• Owners of electronic platforms (digital platforms, marketplaces)
What is the OSS mode for?
The OSS mode is designed for paying VAT in the Czech Republic on sales of goods and services to end users (B2C) in other EU countries and for which the supplier is obliged to pay VAT in the consumer’s country. The supplier (OSS user) registers in the OSS mode and pays VAT only in one of the EU member states (for example, in the Czech Republic).
Three OSS modes are introduced:
- European Union mode (EU mode): for residents of the Czech Republic (companies or entrepreneurs with a legal address in the Czech Republic), as well as for permanent representative offices of non-residents of the European Union or for non-residents of the European Union without a representative office, who are sending/shipping goods from the territory of the Czech Republic (with a warehouse of goods in the Czech Republic)
- Import mode (iOSS mode): for residents of the Czech Republic (companies or entrepreneurs with a legal address in the Czech Republic), as well as for permanent representative offices of non-residents of the European Union or for non-residents of the European Union without a representative office, represented by an intermediary
- Outside of the European Union mode (outside of the EU mode): for non-EU residents who provide services to end consumers in EU countries
Which transactions fall under the process of paying VAT through the OSS mode?
- Remote sales of goods to end consumers in other EU countries (EU mode)
- Provision of services by European companies to end consumers in other EU countries (EU mode)
- Delivery of goods via marketplaces within one EU country (EU mode)
- Sales by foreign companies (by non-EU residents) of imported goods from third countries with value up to 150 EUR directly to end consumers in the EU (iOSS import mode)
- Provision of services by foreign companies (by non-EU residents) to end consumers in other EU countries (outside of the EU mode)
Is using the OSS mode mandatory?
• Using the mode with one place for VAT obligations (OSS: in English ‘One Stop Shop’) is not mandatory, but significantly simplifies the fulfillment of tax (VAT) obligations that arise for sellers who have to pay VAT in other EU countries.
• If a seller does not use the OSS mode, usually obligations to register for VAT and to pay VAT in each EU country where goods or some services are consumed will arise; or in situation when the sale of goods imported by a non-EU resident from outside the EU in the amount of up to 150 EUR to end consumers in the EU then the end consumer has the obligation to pay VAT and in the OSS mode this VAT obligation can be fulfilled by the seller.
To which government body should I report for OSS?
In the Czech Republic, the OSS mode is provided by the Tax Office of the South Moravian Region in Brno (Finanční úřad pro Jihomoravský kraj v Brně). Registration is carried out exclusively in the electronic format on the Tax Portal (Daňový portál Finanční správy ČR) within 10 days of a month consecutive the month when the 1st delivery of goods / services took place.
Additionally, read our articles about OSS modes: EU mode and iOSS mode.
If you have further questions, please contact DoMyTax specialists. Our team has been engaged in accounting services, tax consulting and tax optimization in the Czech Republic for over 10 years.