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  • VAT OSS and IOSS since 2021: a huge challenge for the swiss e-commerce

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VAT OSS and IOSS (import-one-stop-shop) since 2021: a huge challenge for Swiss e-commerce

OSS and IOSS e-commerce trend 2021 : Changes to the Import One-Stop Shop

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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 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.Optimize your logistics and shipping process! Try out our Optimizer 4.0

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 € 22 exemption limit for imports of small consignments from third countries

But one thing at a time! First, we will concentrate on today's intra-European VAT accounting - and how Brussels intends to changeit.


The current VAT situation in Europe

Here is an overview of how the current VAT statement works:

Overview of current VAT arrangements in Europe

As an example here we use a Finnish e-commerce retailer. He sells his products to private customers who live in other countries in Europe.


Turnover thresholds are relevant

Today, the Finnish retailer benefits from various country-specific turnover thresholds, ranging from €35,000 to €100,000. This means that as long as the country-specific sales remain within this range, the Finnish retailer can charge  Finnish VAT

However, as soon as, for example, his turnover in Germany exceeds €100,000, the online retailer from Finland must register in Germany and settle the German VAT with the German tax authorities on a monthly basis. This example applies to every EU country, of course. 


VAT brake to be removed

The EU estimates that such registration costs an EU company on average €8000.  The EU finds this too high. This amount is clearly a brake on  intra-European cross-border e-commerce.  So a new and simpler solution was needed!


The new value-added tax statement is called OSS

The OSS system was introduced on 1 July 2021. OSS stands ford One Stop Shop. But what does this mean for our Finnish online retailer?

Overview of VAT transactions in Europe from 1 July 2021

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

New turnover threshold €10'000 

For Finnish e-commerce merchants, this means that they can charge their Finnish VAT up to a foreign turnover of €10,000. If his foreign turnover - attention: not per country, but in the whole EU!-  exceeds this amount, he must 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.


Simplified handling

Finally, once a month, the Finnish trader transfers the collected foreign VAT amounts to the Finnish tax authority using the One-Stop-Shop portal. This OSS portal will probably be a web service that the trader can access by means of a login. The Finnish tax authority will then distribute the amounts to the respective EU countries in which the end consumers live.


Register once and you're done

The great advantage of the OSS system is that the Finnish trader no longer has to register in all EU countries. A single OSS registration  is sufficient to display and account for the respective foreign VAT rate. 

Note: The OSS cannot be used for domestic VAT invoicing!

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

But what does the system mean for Swiss traders who ship to the EU? 


IOSS: the OSS for non-EU traders

Since 1 July 2021, the EU also offer a VAT solution for non-EU traders who sell their products to customers in the EU. It is called IOSS. This abbreviation stands for Import One Stop Shop. Like the OSS, it is used for the simple billing of VAT receipts. However, the use of IOSS is voluntary.

Overview of VAT transactions between Switzerland and Europe from 1 July 2021

And this is how IOSS works: First of all, a Swiss retailer must register for it . However, he cannot do this registration himself, but needs an intermediary who is resident in the MSI (Member State of Identification) - a kind of fiscal representative. This agent will register the Swiss trader with the IOSS and will be responsible for monthly European VAT invoicing and payment.


Show VAT rates on webshop

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

However, Swiss online traders do not report and transfer the various VAT amounts to the Swiss tax authorities on a monthly basis, but to the MSI

The Swiss trader therefore reports the total EU VAT amounts to his EU intermediary on a monthly basis. The latter then ensures that the VAT accounting and payment is carried out.


Turnover threshold does not apply here

There is also a striking difference to OSS: With IOSS, the Swiss retailer will not be able to profit from the €10,000 sales threshold. Instead, they will have to display and communicate the respective country-specific VAT rates in their web shop from the first euro of sales.


Value of goods limit is relevant

Another important difference is worth mentioning: In contrast to OSS, the €150 value limit applies. The Swiss retailer can only register consignments with an  intrinsic value of goods (i.e. the value of the goods excluding VAT and transport costs, these must be shown separately) of max. € 150 in the IOSS and thus send them. Consignments exceeding this value may not be sent via IOSS, they need another solution. The basis for the goods value limit is the  check-out value of the order.  


IOSS is therefore an ideal solution for retailers who ship goods for less than € 150. A simple registration is sufficient and they can send goods by post to any country in the EU without having to pay customs duties and taxes on receipt. So they shop without unpleasant surprises.

Still having some questions? Let's answer them!


IOSS and OSS in e-commerce: Are you an online retailer and would you like to sell your products abroad carefree even in 2024? Then this blog is a must read! Don't worry, we will keep it short ...