OSS and IOSS - EU VAT registration for Swiss e-commerce

Cross-border e-commerce is experiencing a continuing boom and is therefore growing at an extraordinary rate. Never before has it been so easy to reach and supply consumers on the other side of the swiss border.

But: international e-commerce does not only concern IT, logistics and marketing, but also topics that are less sexy. Like taxes, for example. But what must be, must be. We will help you and present the two new systems IOSS and OSS.

IOSS and OSS - what does that actually mean?

A major change in VAT has been introduced on 1 July 2021. It concerns sales companies whose business activities take place within the EU or are linked to countries in this economic area. The so-called VAT E-Commerce Package is a new feature of the European VAT system. With this package, Brussels has three main objectives:

1. Facilitate cross-border trade by simplifying the VAT invoicing process
2. Combating VAT fraud
3. Ensuring fair competition for EU companies. This means abolishing the EUR 22.- exemption limit for imports of small consignments from third countries

Are you planning to export abroad? Then take a look at our blog about localisation in cross-border e-commerce. We'll tell you what to look out for when exporting.

The new VAT accounting system for Switzerland as a third country of the EU is called IOSS

Since 1 July 2021, the EU started offering a VAT solution for non-EU retailers who sell their products to customers in the EU. It’s called IOSS, and stands for Import One-Stop Shop. Like the OSS, it is used for the simple settlement of VAT incomings. The use of the IOSS VAT number is voluntary.

And this is how IOSS works: first, Swiss retailers have to register for it. However, they cannot register themselves, but need an intermediary based in the MSI (Member State of Identification) – a type of fiscal representative. The intermediary registers the Swiss retailer with the IOSS and is responsible for the monthly European VAT invoicing and payment.

Display VAT rates in the web shop 

Like EU retailers, Swiss online retailers have to communicate the respective VAT rates of the destination country in their web shop. For shipments to Germany, this means German VAT, for France French VAT, etc.

However, Swiss online retailers don’t report and transfer the various VAT amounts to the Swiss tax authorities on a monthly basis, but to the MSI (intermediary).

Swiss retailers therefore report the total EU VAT amounts to their EU intermediary on a monthly basis. The intermediary then ensures that the VAT invoicing and payment are carried out.

Do you want to ship your goods abroad? Then you might be interested in our article on cross-border online trade.

Turnover threshold doesn’t apply with IOSS (Import One Stop Shop)

There is a striking difference to OSS: with IOSS, Swiss retailers will not be able to benefit from the EUR 10,000 turnover threshold. Instead, they will have to display and communicate the respective country-specific VAT rates in their web shop from the first euro in turnover.

The goods value limit is relevant 

Another important difference of the IOSS should be mentioned: in contrast to OSS, the EUR 150 goods value limit applies. Swiss retailers can only register consignments with an intrinsic value of goods (i.e. the value of goods without VAT and transport costs, and these must be shown separately) of max. EUR 150 in the IOSS and send them with it. Consignments that exceed this value may not be sent via Import One Stop Shop, they require a different DDP solution. The goods value limit is based on the check-out goods value of the order.

IOSS is therefore an optimal solution for retailers who ship goods under EUR 150. All they need to do is register for the IOSS and they can send goods to any country in the EU without customers having to pay customs duties and taxes when they receive them. The customers therefore shop DDP without having to pay import duties when they receive their goods. Unfortunately, there may be exceptions in certain countries, where a handling fee is charged to the recipient on delivery despite the IOSS VAT number. Inquire in advance regarding the current IOSS handling charges from your service provider.

Do you want to start your export business? Then get more important information about starting your export business.

OSS: The new VAT settlement for EU-based companies

The EU introduced OSS for the EU on 1 July 2021. OSS stands for “One Stop Shop” and is intended for e-commerce retailers based in the EU who ship goods to private customers from one EU country to another.

As a Swiss e-commerce retailer, you can only benefit from the OSS solution to a limited extent. Either by using warehouses in the EU with the associated registrations and legal requirements or with an importer solution, for example.

If you are a Swiss e-commerce retailer and would like to benefit from the OSS solution because the IOSS solution is not optimal for your business case, we recommend that you seek advice from our customer advisors.

But what does this mean for EU e-commerce retailers?

Since 1 July 2021, the former country-specific turnover thresholds have been abolished. A new Europe-wide turnover threshold of EUR 10'000.- was introduced.

New turnover threshold EUR 10'000 

For e-commerce traders, OSS means that they can charge VAT via their local VAT number up to an annual foreign turnover of EUR 10'000. If their foreign turnover - note: not per country, but in the entire EU! - exceeds this amount, they must register for OSS and charge the VAT rate of the destination country.

Transparency in the webshop

For his web shop, this means that he has to show and charge the VAT rate of the destination country. By the way, modern shop systems can easily implement this.

Vereinfachtes Handling mit OSS

Once a month, the e-commerce retailer finally transfers the total foreign VAT amounts to the registered tax authority using the One-Stop-Shop portal. This OSS portal is a web service that the retailer can access by logging in. The tax authority then distributes the amounts to the respective EU countries in which the end consumers live.

Register once and you're done

The major advantage of the OSS system is that e-commerce retailers no longer have to register in all EU countries. A single OSS registration is sufficient to map and settle the respective foreign EU VAT rate.

Note: The OSS (One Stop Shop) cannot be used for domestic VAT accounting!

The OSS system is therefore a very efficient solution for EU traders, which will greatly simplify and also strengthen cross-border e-commerce.