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NetSuite One Stop Shop Updates

Mini One Stop Shop is created by the EU to ease the burden on businesses selling to consumers across the Union. No more having to register for VAT in each country, One Stop Shop allows businesses to submit a single VAT return declaring sales in multiple EU Member States.

B2C sellers dispatching their goods from a single country to EU will no longer be required to register for foreign VAT and complete multiple VAT filings in countries where they are selling. Instead, they are allowed to simply file a filing alongside their regular domestic VAT return that will list all their pan-EU sales. This 2021 EU VAT ecommerce package that previously referred to as MOSS then officially reformed on 1 July 2021, which the original plan had been for 1 January 2021.

Launching the single OSS EU VAT return

The Import One Stop Shop (IOSS) came into effect on 1 July 2021. It applies in a specific situation where goods, in consignments up to a certain value, are sold from a non-EU country to an end-consumer located in the EU.

Businesses registered for the scheme will file a single IOSS return covering all relevant EU sales. Inclusion in the scheme requires businesses to charge VAT at the rate of the EU Member State in which the goods are being imported at the point of sale. Sellers can use the delivery address of their customer to identify the country of residence. Then determine the correct VAT rate, as well as applying reduced or nil VAT rates, according to the varying rates and goods classifications of each member state of their customers.

The EU VAT collected is then paid to HMRC when submitting the VAT return, with HMRC dispersing the EU VAT collected to the relevant EU Member State. To avoid delays at customs, businesses will need to ensure their unique IOSS identification number is stated on packages.

The IOSS is not available for items subject to excise duties (e.g. alcohol and tobacco). Under the new scheme, only the VAT on sales is declared on the IOSS return, there is no option to reclaim any input VAT. Any input VAT incurred from EU Member States would need to be recovered directly from the tax authority in which the VAT was paid under the 13th directive system.

NOTE: Sellers holding stock in other EU countries will not benefit from the OSS single return simplification. They must remain VAT registered in each country where they are holding stock. This includes selling using the Amazon FBA program.

The OSS filing will be a quarterly return. It is intended as a simple listing to declare VAT due by the seller to each EU country apart from the domestic state.

NetSuite For OSS

From 1st July 2021 the EU introduced new commerce compliance rules that changed the way VAT is handled for online sales from businesses worldwide to consumers (B2C) in the EU. The changes also impact all businesses outside of the EU, including the UK that sell to consumers in the EU.

As of September 2021, NetSuite has added support in SuiteTax for OSS and cover all three schemes:

  1. Union scheme –sale of goods and certain services within EU

  2. Non-union scheme –sale of certain services to EU by non-EU established companies

  3. Import scheme (IOSS) –applies to consignments of €150 (£130) and below, or equivalent local currency in the consumer’s country.

In addition, Sovos can provide the OSS tax filing services to any customers.

Distance Selling – B2C Sales within the EU

Distance selling applies to any goods that move from one EU state to a buyer in another EU country and where the buyer is not registered for VAT. Sales transactions in SuiteTax now automatically checks the Ship To Country and also if the customer is registered for VAT or not. For B2C Sales, the VAT rate charged is based on the buyer’s country, while B2B sales charges the VAT rate based on the supplier's country.

Interested in finding articles like this? make sure to check out other helpful tips, tricks, and updates our blog.

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