If you sell goods or digital services to customers in other EU countries — whether through your own website, a marketplace, a booking platform, or any other type of online channel — you may face complex VAT obligations. VAT on cross-border online sales is far from straightforward: different rates, different rules in each country, and the need to register for tax in multiple jurisdictions… Even seasoned entrepreneurs can find it overwhelming.
Fortunately, the EU offers a solution — the One Stop Shop (OSS) scheme. It simplifies VAT calculation and reporting for cross-border sales within the EU, eliminates unnecessary bureaucracy, and allows you to avoid registering separately in every country where you have customers.
In this article, we’ll explain:
- What OSS is and how it works
- When you really need to use it
- What thresholds apply to distance selling
- How to register and file returns
- And what VAT-related risks you should consider in e-commerce upfront
What Is the OSS Tax Scheme and Who Needs It
OSS (One Stop Shop) is a special VAT scheme that allows businesses selling goods or digital services to end consumers in EU countries to file VAT returns and pay the tax through a single tax authority — in their country of registration.
Before OSS was introduced, entrepreneurs selling to multiple EU countries had to register for VAT in each country where they exceeded the local threshold. This meant submitting separate VAT returns according to each country’s rules and rates — often requiring local tax consultants.
With the implementation of OSS, the process has become much simpler. A single VAT registration in one EU country is now enough to handle all cross-border B2C sales within the EU.
The OSS scheme applies only when you are selling to private individuals (non-VAT payers) in EU countries. Specifically, you can use OSS if you:
- Sell goods to customers in other EU countries — e.g. via an online store, platform, or marketplace
- Provide telecommunications services
- Provide broadcasting services
- Provide electronic services
- Provide other services for which the VAT is due in the buyer’s country (place-of-supply rule applies)
At the same time, your total cross-border sales to EU consumers must exceed €10,000 per calendar year, aggregated across all EU countries.
Important: OSS does not apply to business-to-business (B2B) transactions or to domestic sales within a single country.
How VAT Works for Online Sales of Goods and Services in the EU
To understand how VAT is applied to online sales, it’s important to identify the place of supply — this determines which country’s VAT rules apply and where the tax must be paid.
If you’re selling goods exclusively within the Czech Republic, Czech VAT rates apply — either the standard or reduced rate, depending on the type of goods or services. But once you start selling to end consumers in other EU countries, the rules change.
The first step is to understand who your customer is:
- If the buyer is a business registered for VAT in another EU country, the reverse charge mechanism applies. In this case, VAT is accounted for by the buyer, and the OSS scheme is not used.
- If the buyer is a private individual (non-VAT payer) in another EU country, the transaction qualifies as distance selling, and the OSS rules come into play.
There is an important threshold of €10,000 for distance sales. Until your total cross-border B2C sales within the EU exceed this threshold (aggregated across all countries in a calendar year), you can continue charging Czech VAT — even if your buyers are located elsewhere in the EU.
However, once your total B2C distance sales exceed €10,000 in a year, you must either:
- Register for VAT in every EU country where you have customers, or
- Use the OSS scheme and report all VAT centrally through the Czech tax authority.
Summary for Czech E-commerce Sellers:
- If your annual sales stay under €10,000 or you sell only within the Czech Republic, you charge and pay VAT under Czech rules.
- If you exceed €10,000 in cross-border B2C sales to other EU countries, you must use OSS or register separately in each country where your customers are based.
OSS returns cover not only distance sales from a Czech warehouse, but also from any warehouse located within the EU. The key condition is that it must be a cross-border sale to an end consumer — that is, the goods are dispatched from a warehouse in one EU country and delivered to a customer (a private individual or, for example, a non-profit organization) in another EU country.
Important: Moving goods between your own warehouses in different EU countries typically triggers a VAT registration obligation in the destination country. This is because such intra-company transfers are treated like B2B supplies, even though the seller and buyer are the same legal entity — your company. As a result, you must handle the VAT due in the country where the goods arrive.
What Is Distance Selling and How Is the Place of Supply Determined for VAT Purposes
Distance selling refers to the sale of goods to private individuals (non-VAT payers) in other EU countries, where the goods are delivered across borders — regardless of the sales channel used (your website, a marketplace, or a booking platform).
From a VAT perspective, it’s essential to determine the place of supply — in other words, the country where the VAT obligation arises.
According to §8 of the Czech VAT Act, if your annual volume of distance sales does not exceed €10,000, the place of supply is considered to be the country of dispatch — in this case, the Czech Republic. Once this threshold is exceeded, the place of supply shifts to the customer’s country.
Important: The €10,000 threshold applies collectively across all EU countries and includes both goods and services provided to end consumers.
In short, determining the place of supply is what defines whether you should apply Czech VAT, register for VAT in other countries, or use the OSS scheme.
How to Register for the OSS Scheme in the Czech Republic
To use the OSS scheme, you must complete a dedicated registration process. It is available only to those who are already registered in the Czech Republic either as a VAT payer or as an identified person. If you don’t yet hold this status, you’ll need to obtain it first — only then can you apply for OSS.
Registration is done online via the Czech Financial Administration Portal (MOJE daně) at www.mojedane.cz. The application is submitted electronically through your personal taxpayer account.
In the Czech Republic, all OSS taxpayers are administered by the Financial Office for the South Moravian Region (Brno I) — regardless of where your business is physically located. This centralized authority handles OSS registrations, record-keeping, and VAT returns.
What You Need to Register for OSS:
- A valid VAT registration or identification status in the Czech Republic
- Access to your electronic tax account (MOJE daně)
- Confirmation that you have begun distance selling to EU consumers
- Selection of the appropriate OSS scheme type (we’ll cover this in the next section)
Types of OSS Schemes
The OSS system includes three different schemes, depending on where your business is registered, what you sell, and who your customers are.
EU OSS Scheme (Union Scheme)
This scheme is designed for companies established within the European Union. It applies if you sell goods to end consumers in other EU countries, or if you provide electronic, telecommunications, broadcasting, or other services to private individuals within the EU.
If your company is registered in the Czech Republic, this is the scheme you will be using.
Non-EU OSS Scheme (Non-Union Scheme)
This scheme is for companies based outside the EU that provide digital services to private consumers in EU countries. It applies only if the company has no branch or establishment within the EU, but sells services to EU end users.
Import OSS Scheme (IOSS – Import One Stop Shop)
This scheme applies to sales of goods imported into the EU from non-EU countries, where the value of the shipment does not exceed €150. It is used for distance sales with direct delivery to EU consumers. Under IOSS, VAT is paid in advance, so the buyer is not required to pay VAT upon delivery.
How and Where to File VAT Returns Under the OSS Scheme
OSS returns must be submitted quarterly, regardless of your sales volume. Even if you had no transactions during the period, you are still required to file a zero return.
Each return includes the following details:
- The total value of distance sales and services (excluding VAT)
- The destination country
- The applicable VAT rate in that country
- The amount of VAT due
- The type of supply (goods or services)
The VAT return must be submitted by the end of the month following the reporting quarter, and it must be filed in euros — even if your company’s accounting is in Czech crowns.
The VAT payment is transferred to a designated account of the Czech Financial Administration, also in euros. The Czech tax authority then takes care of distributing the collected VAT to the appropriate EU Member States where the sales occurred.
Important notes:
- The OSS return does not include domestic sales within the Czech Republic, intra-EU sales within a single country (e.g. from a warehouse in Germany to a German customer), B2B transactions, or any other operations not covered by OSS.
- Under OSS, you cannot claim input VAT deductions — those must be handled separately through your regular national VAT return.
Can You Claim Input VAT Under the OSS Scheme?
No. The OSS scheme does not allow you to claim input VAT on goods or services you purchase. This means that all expenses related to purchasing goods, packaging, delivery, advertising, and other VAT-taxable services cannot be refunded through an OSS return.
If you want to recover VAT on such expenses, you must do so separately, either via:
- A standard Czech VAT return, if you are a registered VAT payer in the Czech Republic; or
- A VAT refund procedure in another EU country, if the purchase was made abroad and you are not registered for VAT in that country.
This separation is important to keep in mind: while OSS simplifies cross-border VAT reporting, it does not replace the traditional input VAT recovery system.
How to Make Corrections After Submitting an OSS Return
If you make a mistake in an OSS VAT return, corrections can only be made in your next regular quarterly return — that is, in the return for the following quarter.
Once the submission deadline for a reporting period has passed (i.e. the end of the month following the quarter), you can no longer edit the original return. Instead, any adjustments must be reported in the next OSS return, with a clear reference to the period being corrected.
For example: if you discover an error in your Q1 return but the deadline has already passed, you must include the correction in your Q2 return, noting that the adjustment applies to Q1.
How Corrections Are Handled:
- If the VAT amount increases, you simply pay the difference.
- If the VAT amount decreases, the overpayment is credited toward your current obligations.
This approach eliminates the need for amended returns and ensures a uniform correction process across all EU Member States.
Key Takeaways on the OSS Scheme
OSS (One Stop Shop) is a simplified VAT scheme designed for distance sales to private consumers in other EU countries.
It allows businesses to avoid VAT registration in each customer’s country and instead submit a single VAT return through their home country’s tax authority (in the Czech Republic, this is the Financial Office for the South Moravian Region).
OSS applies if:
- You sell goods or digital services to private EU customers, and
- Your total annual turnover from such sales exceeds €10,000 across all EU countries.
Types of OSS:
- EU OSS – for companies based in the EU (most commonly used)
- Non-EU OSS – for companies based outside the EU that provide services to EU consumers
- Import OSS (IOSS) – for goods imported from outside the EU, valued up to €150
Important notes:
- Returns are filed quarterly and in euros
- Even if there were no sales, a zero return must still be submitted
- Input VAT cannot be reclaimed under OSS — it must be claimed separately via standard VAT procedures
- Errors can only be corrected in the next VAT return, referencing the affected quarter
While OSS doesn’t solve all tax challenges, it significantly simplifies VAT compliance for e-commerce businesses selling to private individuals across the EU. It’s a valuable tool for those looking to scale operations without unnecessary administrative burden.
Still have questions?
Contact DoMyTax for professional tax advice in the Czech Republic. Our experts have years of experience and will help you find the best solution — even for the most complex VAT issues.
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