Online traders based within the EU who sell goods to other EU member states via Amazon or other online market operators can use the one-stop-shop procedure (OSS) for VAT returns. The OSS is new in this area. Finally, the EU member states introduced the OSS uniformly after a six-month postponement on July 1, 2021. This includes that German online retailers at Amazon can now declare and pay all sales taxes incurred in other EU countries via the Federal Central Tax Office. However, some conditions apply here. In particular, the minimum annual turnover of EUR 10,000 in other EU countries and the restriction of this turnover threshold to end customers and their equivalent entrepreneurs are essential here.
1. OSS at Amazon - Introduction
2. What is the new OSS and how does it relate to Amazon?
OSS is therefore a new taxation procedure that is used within the EU to record the associated sales tax when providing cross-border services. The OSS represents an alternative to the previous regulation for registering and paying sales tax. Until now, you had to register and pay the sales tax incurred in another EU member state in this country if your sales exceeded the delivery threshold applicably there. To do this, you had to register separately for tax purposes in each country where this condition applied. It was also irrelevant whether you sold goods via your online shop or offered them at an online marketplace like Amazon. However, if the sales values were below a delivery threshold, one had the freedom to tax the sales according to one's own national laws. In this case, you paid the sales tax in your own country.
The OSS now simplifies this excessively bureaucratic procedure. In principle, you can now use OSS to register the sales tax that is incurred in all other EU member states with the Federal Central Tax Office (BZSt-Germany's Federal Central Tax Office) and transfer it collectively. The BZSt then uses the data stored by the online retailers (name of the company/entrepreneur, VAT identification number) to allocate the individual VAT amounts in accordance with the submitted OSS tax return. In this way, every member country in which goods were sold, for example via Amazon, in the relevant tax period receives the sales tax to which it is entitled. The sales tax rates applicable for this naturally correspond to the tax rates applicable in the member states.
Since online traders who, for example, also sell their goods on Amazon to other EU countries, now have the opportunity to participate in the OSS, Amazon has now asked them to do so in order to fulfill their own obligations as a marketplace operator. For this reason, the online retailers integrated with Amazon must from now on submit their sales tax identification number and proof of their registration for the OSS. Otherwise, their accounts will be blocked. Previously, the submission of a certificate according to § 22f UStG-(the German Value Added Tax Act) was required.
3. OSS at Amazon: the legal basis
The introduction of the OSS and thus the effects it has on online sales via Amazon can be traced back to the implementation of the second stage of the EU VAT digital package. Sections 18i, 18j, and 18k UStG in particular are subject to fundamental changes. §§ 18i and 18k UStG are regulations for a special taxation procedure comparable to the OSS for the provision of certain services. § 18j UStGon the other hand, contains the legal requirements that apply to the actual OSS (so-called “EU regulation”). They apply to intra-Community distance selling, to the provision of other services by companies based in the EU, which they carry out in third countries, and to deliveries within a member country in which an electronic interface is significantly involved. The latter case also characterizes the application of the OSS for online retailers who use Amazon or other online platforms to sell goods.
4. Prerequisites for using the OSS at Amazon
In order to be able to participate in the OSS as a retailer working at Amazon, you have to meet a few requirements. It is irrelevant whether the company is based in Germany or in another EU country. As an entrepreneur, you have to exceed a turnover threshold of EUR 10,000 per year when trading with end customers in other EU countries in order to be able to participate in the OSS. Trade with other companies based in other member states is therefore irrelevant. However, there are also exceptions to this. Entrepreneurs who themselves do not provide any services subject to VAT and are therefore excluded from input tax deductions are treated as end customers. For example, this is the case for small business owners subject to VAT. However, doctors and other medical professionals who do not provide VAT services are also exempt from this.
If these sales are below the sales threshold in the previous as well as in the current year, you either have to follow the sales tax rules applicable in Germany or register in the respective EU country for sales tax purposes. In the latter case, the sales tax incurred there is then regularly deducted. However, the latter also means that you have to register for VAT in all EU countries in which you provide services that are subject to VAT there. Therefore, it should probably be more advantageous if you opt for sales tax in Germany.
However, if an online retailer based outside the EU sells goods via Amazon to end customers in the EU, Amazon, as the operator of the electronic interface, assumes the obligation to pay sales tax in the respective EU member state. Amazon itself can also use the OSS to process all sales tax obligations. The sales threshold of EUR 10,000 is irrelevant here.