From July 1, 2021, the so-called e-commerce VAT package, which allows for simplified settlement of VAT due in European Union countries. One of the new features is the VAT OSS procedure - what is it, when can it be used and what does sales settlement in the VAT OSS system involve?

VAT OSS procedure – what is it?

VAT OSS (One Stop Shop) is the EU VAT settlement procedure, which replaced the VAT MOSS (Mini One Stop Shop) procedure in force until June 30, 2021. The VAT MOSS procedure enabled taxpayers simplified VAT settlement due in various member states. Thanks to this, the taxpayer did not have to register with the tax office in every European Union country in which he sold - registration in one of the Member States was enough. However, the MOSS procedure allowed for the settlement of VAT only in the case of the provision of telecommunications, broadcasting and electronic services. The VAT OSS procedure, in force from July 1, 2021, has been extended to include intra-Community distance sales of goods (ESTO). The regulations entered into force with the e-commerce VAT package and cover both trade in goods and electronic services.

VAT OSS procedure and sales limit

A VAT taxpayer who obtains revenues from the sale of products and services to consumers from other EU countries below the annual limit (10,000 euros), can be settled in three ways:

  • by paying tax according to the rules applicable to domestic sales (Polish VAT rate),
  • by voluntary VAT registration in consumer countries,
  • by registering to VAT OSS system, in which the taxpayer settles all sales to consumers from other Member States.

After exceeding the annual limit the entrepreneur has two options to choose from:

  • VAT registration in each EU country to which you sell goods or services,
  • use of VAT OSS procedures, which enables convenient tax settlement in the country of registration.

When is it worth using VAT OSS?

Registration to the VAT OSS system is completely voluntary, but please remember that after joining the system, all transactions for buyers from the European Union must be settled in the same way. Both active VAT payers and non-VAT taxpayers can join the VAT OSS procedure, and registration for OSS does not result in the loss of the right to VAT exemption or interfere with registration for VAT-EU. It is worth joining VAT OSS, especially after exceeding the sales limit – in such a situation, the taxpayer is obliged to register for VAT in each buyer's country, and this can be avoided thanks to the VAT OSS procedure, which significantly simplifies tax settlements and allows to waive the obligation to register multiple times in several member states.

How to settle sales in the VAT OSS system?

The OSS VAT system allows you to report all foreign sales in one declaration (in Polish) and pay tax in the country of business registration. VAT must be paid in euro currency – according to the rates applicable in the consumer countries (e.g. 19% in Germany, 20% in France). 

In OSS you cannot declare:

  • domestic sales made to buyers in Poland, 
  • sales to entrepreneurs (B2B),
  • foreign local sales, which involve, for example, sending goods from a warehouse located in France to a recipient in France.

To register for VAT OSS, you must submit an application on the form VIU-R, and then fold VIU-DO quarterly returns by the end of the month following each subsequent quarter (via the e-Deklaracje system to the head of the Second Tax Office Warszawa-Śródmieście).

If you have questions or want to use support when registering for VAT OSS and submitting declarations, contact us. At Open Profit we offer convenient online accounting services for small and medium-sized entrepreneurs.

FAQ – Frequently asked questions and answers

What is the difference between VAT OSS and VAT MOSS?

The OSS procedure replaced the MOSS procedure, which was in force until June 30, 2021. While the MOSS procedure allowed the settlement of VAT only in the case of the provision of telecommunications, broadcasting and electronic services, the OSS system was extended to include mail order sales of goods to Member States as part of e-commerce services. .

What is the annual sales limit to other EU countries?

The annual limit on the value of goods and services provided to consumers from other Member States is EUR 10,000, which translates into PLN 42,000. The limit covers total sales to all European Union countries, and exceeding it results in the need to register for VAT in each buyer's country or use the convenient VAT OSS procedure. 

Can registration for VAT OSS deprive me of the right to VAT exemption?

NO. Not only active VAT payers, but also non-VAT taxpayers can join the VAT OSS system. Registration for VAT OSS does not result in the loss of the right to VAT exemption, because when verifying the sales limit for VAT exemption, sales settled under VAT OSS are not taken into account.