OSS and IOSS for Estonian e-commerce sellers

The problem they solve

When you sell goods or digital services to consumers in other EU member states, VAT is due in the customer's country at the customer's rate once you cross a threshold. Without a special scheme, that would mean registering for VAT in every country where you have customers. The One Stop Shop 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, covering the combined total of your cross-border B2C sales of goods and supplies of telecommunications, broadcasting and electronic services to other member states.

• Below €10,000: you may continue 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 opt into OSS voluntarily below the threshold, which sometimes makes sense if your main markets have lower VAT rates than Estonia's.

How the OSS return works

You register for the Union scheme in Estonia through the e-Tax Board. Thereafter you file one OSS return per calendar quarter, listing sales by member state and by VAT rate, and pay the total to the Estonian Tax Board, which distributes it. The OSS return is in addition to - not instead of - your ordinary monthly Estonian KMD, which continues to cover domestic sales and input VAT.

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. Registering for IOSS lets you charge VAT at checkout and have the goods clear customs without VAT being collected on delivery.

Without IOSS, your customer is charged import VAT plus a handling fee by the carrier at the door. That is one of the most reliable ways to generate refused deliveries and chargebacks, which is why dropshippers and sellers importing from outside the EU treat IOSS as essential rather than optional.

Marketplaces and the deemed supplier rule

For certain sales facilitated through an electronic interface - notably goods imported in consignments up to €150, and goods within the EU sold by non-EU established sellers - the marketplace is treated as the supplier and accounts for the VAT itself. In those cases you are not the one reporting the VAT, and including those sales in your own OSS return would double count them.

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 that means your accounting has to be able to produce, per quarter, a breakdown of net sales by destination country and VAT rate, net of refunds, 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

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