OSS and IOSS for Estonian e-commerce sellers

The problem they solve

When you sell goods or digital services to consumers in other EU countries, VAT is due in the customer's country, at the customer's rate, once you cross a threshold. Without a special scheme, you would have to register for VAT in every country where you have customers. The One Stop Shop (OSS) lets you register once, in Estonia, and settle all of it through a single quarterly return.

The €10,000 threshold

There is one EU-wide threshold of €10,000 per calendar year. It covers the combined total of your cross-border sales to consumers (B2C, business to consumer) in other member states. That includes goods, plus telecommunications, broadcasting and electronic services.

• Below €10,000: you may keep charging Estonian VAT at 24% on those sales.
• Above €10,000: you must charge the destination country's rate, and OSS is how you report it.
• You may also join OSS voluntarily below the threshold. This sometimes makes sense if your main markets have lower VAT rates than Estonia.

How the OSS return works

You register for the Union scheme in Estonia through the e-Tax Board, the Tax Board's online portal. After that, you file one OSS return per calendar quarter, listing sales by member state and by VAT rate. You pay the total to the Estonian Tax Board, which passes it on to the other countries.

The OSS return comes on top of your ordinary monthly Estonian VAT return (KMD). It does not replace it. The KMD still covers domestic sales and input VAT, which is the VAT on your own purchases.

IOSS: goods imported into the EU

The Import One Stop Shop covers distance sales of goods imported from outside the EU in consignments with an intrinsic value not exceeding €150. Intrinsic value is the value of the goods themselves, without shipping. Registering for IOSS lets you charge VAT at checkout. The goods then clear customs without VAT being collected on delivery.

Without IOSS, the carrier charges your customer import VAT plus a handling fee at the door. That often leads to refused deliveries and chargebacks. This is why dropshippers and sellers importing from outside the EU treat IOSS as essential rather than optional.

Marketplaces and the deemed supplier rule

For some sales made through an electronic interface, such as a marketplace, the marketplace is treated as the supplier and accounts for the VAT itself. This covers, for example, goods imported in consignments up to €150. It also covers goods within the EU sold by sellers established outside the EU. In those cases you are not the one reporting the VAT, and including those sales in your own OSS return would count them twice.

Which of your sales fall into this depends on where the goods are, where you are established and which platform is involved. It has to be mapped from your actual sales reports, not assumed from a general rule.

Bookkeeping requirements

OSS requires you to keep records supporting the country split for ten years. In practice, your accounting has to produce a quarterly breakdown of net sales by destination country and VAT rate. That breakdown must be net of refunds and reconciled to the money that actually reached your bank. Platform payout reports rarely give you this directly.

Common errors

• Refunds not deducted from the country in which the original sale was reported.
• Marketplace-facilitated sales included in the OSS return when the platform already accounted for the VAT.
• Currency conversion done at the payout rate rather than the correct rate for the period.
• Domestic Estonian sales included in the OSS return instead of the KMD.
• OSS registered but the ordinary KMD stopped, on the assumption that OSS replaced it.

Frequently asked questions

TagsOSS returnIOSS EstoniaEU distance selling VAT10000 euro threshold

This page is for general information. For a better answer, get in touch and receive a personal recommendation.

Back to all articles