For non-EU businesses selling products or services in France, the VAT One Stop Shop (VAT OSS) offers a simplified method for declaring and paying the value-added tax (VAT) due. Since 2021, the VAT One Stop Shop – known more often internationally as the Import One Stop Shop (IOSS) – has simplified business-to-consumer (B2C) and e-commerce transactions, and improved access to European markets for businesses. This article provides an overview of the VAT One Stop Shop and its tax provisions.

What’s in this article?

• What is IOSS (also known as the VAT One Stop Shop)?
  
• Who does IOSS apply to?
  
• Understanding the different tax regimes
  
• What are the advantages for businesses?
  
• How do I register?
  
• How do I declare VAT?
  
• How do I pay VAT?
  

What is IOSS (also known as the VAT One Stop Shop)?

The VAT One Stop Shop is an online portal that allows businesses selling goods and services to customers remotely to declare and pay their VAT.

The VAT One Stop Shop is known in Europe as OSS or IOSS, which stand for One Stop Shop and Import One Stop Shop, respectively. This system includes several specific features that vary depending on the type of company registering to use it.

With a single declaration through a secure portal, companies can more easily declare and pay their taxes in France and throughout the EU.

Businesses that choose IOSS are no longer required to register with the tax authorities of individual EU member countries in which their customers are located, in order to declare and pay VAT. Instead, VAT is declared and paid to a single member country through the One Stop Shop. This portal makes it easy for businesses to sell their goods or services in several European countries.

Although IOSS is optional, it’s a valuable tool for companies that want to expand their operations in France and the EU, as it greatly simplifies VAT-related tax responsibilities.

Who does IOSS apply to?

IOSS is a service designed for any supplier or distance seller who wants to reach customers in the EU. It can be used by businesses selling goods up to €150, whether from an EU or non-EU country, to customers residing in the EU. This entire process can affect all participants in e-commerce, such as sellers on online platforms, postal services, and customers. IOSS enables businesses to comply with VAT reporting obligations.

Intermediaries

IOSS also applies to intermediaries. Any business that does not have a presence nor a permanent establishment in the EU must appoint an EU-based intermediary to register for the scheme.

Intermediaries act as representatives for non-EU businesses, handling the business’s tax compliance and VAT returns. Having these representatives simplifies the process for non-EU businesses, allowing them to comply with EU VAT reporting requirements without needing to establish a physical presence in a member country.

Understanding the different tax regimes

There are different tax regimes for companies based on the nature of their businesses. Each regime has its own specifics, depending on the company, its activities, and the country it is located in. A company must first select the tax regime that matches its activities to accurately fill in its declaration via the OSS online portal. To decide which regime fits best, businesses need to understand the details of each, specifically EU OSS, non-EU OSS, and IOSS.

EU OSS

The EU OSS scheme applies to companies based in the EU that sell remotely to other member countries. This is the most straightforward scheme, as companies simply choose the country in which they are registered. It allows them to provide services exclusively within the EU by registering in only one member country.

Non-EU OSS

The non-EU OSS scheme is designed for companies located outside the EU that sell remotely to customers in member countries. Under the non-EU scheme, a company that is not permanently established in the EU or does not have a head office in the EU can choose any member country as its member country of identification.

For example, an American company that stores its goods in France for sale to customers in other member countries might select France as its member country of identification under the non-EU OSS. The company could, however, choose any other member country.

IOSS: Import regime

IOSS is specifically designed for the distance selling of goods imported from non-EU countries to EU customers, provided the value of the goods does not exceed €150. Any business involved in this type of sale can register for the import scheme. However, if a seller does not have a presence in the EU, they must appoint an intermediary to use the scheme.

For example, a Brazilian seller on an e-commerce platform that sells goods from China to customers in France, Italy, and Portugal would need to find an intermediary in one of those countries to join the IOSS scheme.

What are the advantages for businesses?

The OSS and IOSS schemes allow businesses and vendors to declare and pay VAT that is due in member countries where they are not established, by using a web portal in the member country where they are registered. For businesses based in France or operating in the French market, the One Stop Shop simplifies the process of declaring and paying VAT.

Simplified sales inside the EU

The VAT One Stop Shop helps businesses simplify their operations throughout Europe by allowing them to register in a single EU member country.

Before OSS, suppliers had to register in each member country in which they supplied goods or services to customers. For example, a French company selling its goods or services in Germany had to register in Germany and declare VAT in both Germany and France. With OSS, that company can declare and pay the VAT due on all its sales within the EU through a single portal in its home country of France.

Customer satisfaction

The OSS system also benefits customers, because the VAT rate applied is that of the country in which the goods are consumed, ensuring greater transparency. For example, a French customer will always pay French VAT, regardless of the country they purchased a product from online. This minimises import fees and other unexpected charges for the customer.

How do I register?

To register with the IOSS or OSS system, companies must possess either an intra-community VAT number or a French VAT tax obligation number (“Référence d’Obligation Fiscale”, or ROF). The intra-community VAT number or ROF allows tax authorities to confirm that the company is correctly identified and meets its tax obligations.

Companies must apply for their OSS or IOSS number before the beginning of the quarter in which they submit their first declaration, or at the start of the quarter prior to providing their first service. The process for obtaining an OSS or IOSS number is the same for both systems.

Obtaining an OSS number

For both OSS schemes, companies in France can register and request an OSS number from the French tax authority. Companies that are from the EU or registered in the EU can access the portal through the One Stop Shop via their business account.

Obtaining an IOSS number

To obtain an IOSS number, companies located outside the EU and not established within the EU must complete form no. 3563-SD and email it to tva.e-commerce@dgfip.finances.gouv.fr to request access to the VAT One Stop Shop.

How do I declare VAT?

Once a company has registered, it must submit declarations quarterly if using the EU or non-EU OSS schemes, or monthly for the IOSS scheme.

The company can declare and pay VAT for all its distance sales within the EU through a single portal. The information provided by the member country of identification is used to distribute VAT to the various member countries where the company’s goods or services are sold.

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Penalties for non-compliance

Meeting reporting and payment deadlines is key. Failure to meet these obligations could result in financial penalties and ultimately exclusion from the OSS or IOSS scheme. Such exclusion would make administrative processes much more complicated, as the company would have to register and report VAT in each member country in which it sells.

For an intermediary, this would result in removal from the identification register. Sellers represented by an excluded intermediary would lose access to the import scheme.

How do I pay VAT?

A supplier pays the VAT owed to the member country of identification directly through the online portal. They pay the total amount indicated in the VAT declaration for all member countries where goods or services are sold. The accepted payment methods are typically the same as those used for other taxes, which might include options such as bank transfers and direct debits.

The member country of identification is responsible for transferring the amounts owed to each member country.