The special regime for value added tax (OSS/IOSS) is a voluntary regime allowing a taxpayer to declare VAT, which is normally due in a number of countries of the European Union, in only one EU country.
OSS/IOSS regime is eligible for cross-border transactions with non-VAT taxable persons (B2C).
Under this simplified VAT regime, companies do not have to register as VAT payers in each Member State where their customers are located.
One Stop Shop (OSS): Union or non-Union regime or special VAT mode for goods and services provided by VAT payers.
Import One Stop Shop (IOSS) is a simplified VAT regime for distance selling of goods imported from third countries or third territories, the fair value of which does not exceed EUR 150.
I. UNION REGIME
The Union regime shall apply to any provision of services and distance selling of goods within the EU (OSS).
|cross-border electronically supplied services
|Cross-border services provided by EU to natural persons carrying out an economic activity in the EU but not in the Member State of consumption (B2C)
|the supply of goods within the EU to natural persons (B2C) by EU or third country companies which, through an internet interface such as a trading venue, platform, portal, facilitate the trading of goods by another third country company on EU territory, becoming the EU’s equivalent supplier.
|distance selling of goods within the EU.
Taxpayers who will be able to use the union regime will be:
1) an EU registered company which:
– provide B2C services in Member States where the company is not established,
– carry out distance selling of goods within the EU;
2) a third country company carrying out distance selling of goods in the territory of the EU;
3) an Internet interface established in the EU or outside the EU, which facilitates the supply of goods – the equivalent supplier, for:
– distance selling of goods within the EU,
– domestic supplies of goods to natural persons when the dispatch and transport of goods begins and ends in one Member State.
In order to declare VAT due on transactions carried out in several EU Member States, the company may, under the Union regime, register in one Member State, in its home country of economic activity, the Member State of identification, or register as a VAT payer in each Member State individually.
II. NON-EU REGIME
The non-EU regime applies to any services to individuals B2C provided by non-economic third-country companies which do not have a permanent establishment within the EU (OSS)
|electronic communications, broadcasting and electronically supplied services
|transport services, rental of vehicles
|cultural and educational activities
|services related to real estate, etc.
Non-EU businesses providing services to non-taxable persons in the EU (B2C) will not be required to register as VAT payers in each Member State where the provision of services is carried out.
Companies will be able to be registered as VAT payers in one EU country and to declare VAT payable in that country through the non-EU regime.
The given non-EU regime is optional and the company can register as a VAT payer and submit VAT returns separately in each EU Member State.
Companies will be obliged to keep detailed records of transactions carried out under the non-EU regime for a period of 10 years.
The VAT return on the services provided under the non-EU regime will have to be provided and VAT should be paid on a quarterly basis, the period for payment of the tax shall be the end of the following month of the taxation period.
A third-country company providing services to natural persons and carrying out distance selling of goods on EU territory must register in both modes: the non-EU regime for the provision of services and the Union regime for the distance selling of goods within the EU.
III. IMPORT REGIMES
1) Import One Stop Shop (IOSS) – special regime for distance selling of goods imported from third countries or territories, the fair value of which does not exceed EUR 150.
All commercial goods imported from a third country must pay VAT regardless of their value. The regime will be applicable to:
|a company doing business in the EU that sells goods imported from third countries at a distance, usually through its online store
|a company not established in the EU that sells goods imported from third countries at a distance, usually through its online store
|EU and third country companies carrying out the promotion of distance selling of goods imported by other companies, of a value not exceeding EUR 150, via the Internet interface – compared suppliers
VAT on imported goods can be paid in the following ways:
1) payment as part of the selling price under the import arrangements IOSS, where the importation of goods is exempt from VAT,
2) payment on import into the EU if the IOSS import regime is not used,
(a) the person presenting the goods to customs at the time of lodging a customs declaration for release for free circulation, where that person chooses to use the special import arrangements; or
(b) using the standard VAT payment procedure.
Customs formalities must be carried out on all imported goods, but customs duties on imports from third countries, with the exception of alcoholic products, perfumes, toilet waters, tobacco and tobacco products, if their value does not exceed 150EUR, shall not be payable
EU companies will, at their discretion, be able to appoint an intermediary responsible for the payment of VAT and for fulfilling their obligations for the purposes of the import regime in its name and in its interest.
Third-country companies will be obliged to appoint an intermediary, an EU registered company, for the use of import regime IOSS, unless a third-country company is established in a country with which the EU has concluded a mutual assistance agreement, for example with Norway.
Under the IOSS import regime, a company will only be able to register in one Member State, the Member State of identification, which may be the home country of the EU company and the home country of the intermediary company of the third country company.
For the application of IOSS, an individual VAT identification number will be assigned to the company or its intermediary and will only be used under the import regime but not to declare transactions for which VAT is applicable in general terms.
The IOSS VAT identification number database will not be publicly available.
Under IOSS, the importation-release for free circulation of low-value goods within the EU will be exempt from VAT, a taxable transaction will occur at the time of supply of the goods and VAT will be charged as part of the purchase price paid by the buyer.
In order to apply the VAT exemption for imports of goods with a value not exceeding EUR 150, the customs declaration must contain an IOSS number.
Under the VAT framework, goods will be considered to have been delivered at the time of receipt of the payment.
The distance selling of goods imported from third countries will be subject to the VAT of the Member State of consumption, namely the EU Member State in which the shipment or transport of goods to the final consignee ends.
Thus, the supplier or the assimilated supplier will have to apply the VAT of the EU Member State concerned at the moment when the goods are sold to customers in the EU.
Member States’ standard VAT rate:
Companies or their intermediaries will have to submit monthly VAT returns to their country of identification for all relevant supplies of goods sold to customers throughout the EU. The deadline for submitting the VAT return will be the end of the month following the reference month.
IOSS payers – suppliers of goods and intermediaries – will be obliged to provide detailed records of the transactions carried out and keep it for 10 years.
2) Import arrangements for the declaration and payment of consignments of goods imported from third countries
Simplified procedure for postal operators, courier mail showing goods to the customs authority.
The import regime will only apply to supplies of goods that are not covered by the IOSS import regime and their dispatch or transport ends in the Member State of importation.
For example, a consignment of goods is made from third countries and imports of goods are carried out in Latvia, the product remains for final consumption in Latvia, and is not sent to another EU Member State.
This import regime shall not apply to excisable goods.
Under the import regime, the consignee will be responsible for the payment of import VAT, but will be charged and paid in the budget by the person who will clear the goods, such as the postal operator.
The new arrangements will allow postal operators and other couriers to declare and pay VAT on shipments of goods from third countries in total for the entire month, rather than declaring each import transaction separately.
Records of such transactions will have to be kept for 5 years.
It should be noted that when applying the import regime, all goods imported from third countries will be subject to the standard VAT rate in Latvia, although the reduced Latvian VAT rate, such as books and journals, is applicable to a particular item, according to the general principles of VAT application. The consignee may refuse to apply the automatic standard rate and choose the reduced rate, but in that case the postal operator will no longer be able to apply the special arrangements for declaring the imports of the goods in question.
Translated from lv using CAT